What Is Financial-Only HOA Management?

Financial advisor holds clipboard and pen in client meeting

A homeowners’ association (HOA) management company is a professional organization that offers services to help HOA boards run their communities. Working with an HOA management company allows board members to better serve residents by sharing key responsibilities and duties, including HOA financial management.

If your board finds the financial aspects of HOA management challenging, partnering with a management company may be the ideal solution. Read on to learn more about financial-only management and how it can help you optimize your community’s potential.

What Is Financial-Only HOA Management?

HOA management companies provide various services designed to save board members the time and effort it takes to carry out essential tasks on their own. Financial-only management is a service tier that focuses solely on one of the board’s primary responsibilities—handling the association’s funds.

While the HOA treasurer and other board members may have skills related to their position, they’re still volunteer homeowners with jobs, families, and busy lives of their own. This can make it difficult to stay on top of complex accounting, budgets, and financial reports for HOAs. Community management companies offer financial-only service packages to support boards with these efforts.

What Services Does Financial-Only Management Include?

While the particular services of financial-only management can vary by company, they typically include:

Financial Reporting

Preparing monthly or quarterly reports can be time-consuming without the right tools or training. However, these reports give board members and homeowners an accurate glimpse into the community’s financial health.

Many management companies provide regular and up-to-date financial reporting, such as:

Balance sheets
General ledger
Check register
Income reports
Expense reports

These documents ultimately help the board make better financial decisions and improve HOA financial transparency.

Budget Preparation

Creating the annual HOA operating budget is a significant undertaking—and a primary service offered by financial-only management. Your board can work with a skilled financial planner who understands HOA budgeting best practices to:

Identify and estimate upcoming expenses
Calculate necessary assessments
Determine the association’s expected income
Allocate funds to maintain the community

Learn More: “Annual Budget Best Practices for HOA Boards”

Bills and Expenses

Keeping the association looking beautiful and functioning at its best requires spending funds on essential services like:

Amenity repairs and upkeep
Landscaping
Utilities for shared spaces
Insurance
Administrative or legal fees

Financial-only management includes accounts payable services to process invoices, issue checks to vendors, and update records accurately.

Assessments and Collections

Billing and collecting HOA assessments, issuing late fees, and ensuring the community has an adequate revenue stream are vital to the association’s operational stability. An HOA management company can assist with these duties to help maintain a steady cash flow and hold homeowners accountable for their financial responsibilities to the community.

Consulting Services

In some situations, board members need professional guidance to act in the community’s best interests. Financial-only management services may feature consultations to discuss HOA fraud prevention, recommended tools and technology, or how the board might implement strategic solutions.

Tax Preparation

When tax season rolls around, many HOA boards rush to meet deadlines and might miss crucial details when filing the association’s taxes. A financial-only management package may give you access to a certified public accountant (CPA) or tax expert who can prepare your taxes and help you avoid costly mistakes.

Reserve Fund Monitoring

Having adequate funding in the HOA reserve account means the association can cover future repairs, major projects, and capital improvements like:

Replacing the clubhouse roof
Resurfacing roads and sidewalks
Installing new playground equipment
Painting community buildings

Financial-only management services often include monitoring reserve funds or fulfilling your HOA’s reserve study requirements to determine the appropriate amount to set aside.

Monthly budget presented on tablet in meeting

What Services Does Financial-Only Management Not Include?

Choosing financial-only management gives your board professional support for your financial needs. However, it doesn’t include other services that a more comprehensive HOA management package may offer, such as:

Property management
Maintenance requests or scheduling
Events and annual meeting oversight
Vendor management or contract bidding
General homeowner communication

Why Do You Need Financial-Only Management?

While some communities require assistance with a broader range of HOA operations, others may only need help with the financial aspects of running the association. You may want to consider financial-only management services if:

You’re a self-managed community.
Board members lack financial experience.
The association is overspending on services.
HOA collection efforts are difficult to manage.
The HOA uses outdated accounting systems.
Handling the financials internally causes a conflict of interest.
There have been budgeting, recordkeeping, or other financial mistakes.

Learn More: “6 Conflict Resolution Best Practices for HOA Board Members”

Benefits of Financial-Only Management

When it comes to your fiduciary duties as a board member, managing the association’s finances is a top priority. Investing in financial-only management services can free up valuable time for board members and ensure the association is in the hands of trusted financial professionals. Here are the top benefits of financial-only management for HOAs:

Simplifies and streamlines board duties
Improves HOA financial transparency
Prevents fraud and protects the association’s money
Implements the latest technology and financial tools
Saves the community money in the long run

Top 10 Considerations for Choosing a Community Management Company

Whether you need financial-only management services or are seeking a more thorough HOA management package, it’s essential to find the right community manager who meets your needs and budget. Check out our ebook, “Top 10 Considerations for Choosing a Community Management Company,” for insider tips to connect with the best HOA management company for your association!