Manage delinquencies with a proper collections policy resolution. Encourage residents to contact the Association for payment plans if they are struggling to avoid legal costs.Managing Association Finances & Expectations

Community Association income can often be limited to the collection of owner assessments. It is especially challenging for small communities to generate additional revenue sources such as facility rental or access fees. Community leaders struggle almost annually with the idea of increasing assessments and how much is too much, but of course have obligations to provide services. Many service contracts include stipulations for renewal increases and too often, service contracts are limited in scope with many hidden add on costs, making it difficult to manage expenses. Residents and leaders alike have a vision of enhanced curb appeal and property maintenance, but this too comes with a cost. So, how do you balance it all? How can you manage expenses while maintaining the community, you are so proud to call home? 

First, let’s talk about managing expectations. Even in our personal lives, we find ourselves struggling to balance our wants versus our needs. But, a good plan is to start with a budget and proper saving to make those wants become reality.

• Proper budgeting is essential. A well thought out professional budget takes into consideration a minimum of a 3-5 year actual expenditure history, year-to-date expenses, and projected year end. Start with expenses and work your way up to income. Never assessment target and always have a properly balanced budget.
• A good budget takes into account the reserve funding requirements. Include the recommended funding to incorporate any shortfalls and variance of projected earned interest.
• Be transparent – provide a detailed narrative to the budget that includes details of what is included in each general ledger account and how those figures were developed. That information will be crucial to next year’s budget cycle!

Second, prioritize, prioritize, prioritize! Develop a multi-year plan for tackling some of those outstanding projects or desired improvements. A 3 to 5 year vision plan can help the current and future Boards implement strategies that not only help those wants become a reality, but provide the Membership with a time frame of when they can expect to see a change. Everyone wants to feel like they are getting something for their money – so start small and work your way up!

Last, manage those service agreements. A strong community manager will advocate on the community’s behalf to negotiate the best deal possible! But remember, you get what you pay for and the lowest bidder is not always the best. A detailed scope of work should be developed and a Request for Proposal issued to a minimum of 3-5 bidders for annual service contracts or large ticket projects. With the proper bidding and contractor vetting practices, a good service provider can be located at reasonable rates. Multi-year agreements are helpful in managing and projected costs, but should never include an auto-renewal provision. And remember, if you have an excellent service provider, but are worried about costs, be candid with them and try to negotiate a reduced rate before simply dumping and running. There is value in long-term relationships and providers that know your expectations.

More quick tips include:

• Select a local management company with a wealth of well-known, proven service providers.
• Contract with local, reputable small businesses.
• Manage delinquencies with a proper collections policy resolution. Encourage residents to contact the Association for payment plans if they are struggling to avoid legal costs.
• Encourage community participation and self-help projects. (Consult your insurance provider and legal team where applicable before doing so.)
• Start with making small noticeable inexpensive improvements – such as planting annual flowers at the community entrance. Curb appeal matters.
• Don’t accept hidden fees! A good partnership includes up front agreements of all possible expenses and transparent tracking and reporting when those charges come into play.

Contact our team today to learn more about how Cardinal can help your association at cardinal@cardinalmanagementgroup.com.

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