All the accounting tasks at your community are running smoothly. The collections, bill payment and financial reporting is happening on time and with good accuracy and explanation. You are a self-managed community and life is good – the important job of a Treasurer is handled by an Ace volunteer. Your board sort of takes this position and person for granted. That is until you receive notice that your Treasurer is stepping down. Your Treasurer may not run for another term, they are “retiring” – burned out or worse a dealing with their own or a spouse’s health issue. Alternatively the Treasurer may be selling their unit and moving away. What do you do?
Assess Available Talent
The first step is to take an informal poll of the talented homeowners who are your neighbors. Do other people with financial expertise live in your community that you could ask to volunteer? If so what if these “candidates” don’t have the time or interest to volunteer? The Treasurer position, especially at a Self-Managed community is a big time commitment and a HUGE responsibility. Collecting money from neighbors and being in charge of association funds is a major fiduciary role.
What are Your Options?
Besides finding an honest, accounting experienced volunteer that has the time to commit to be your Treasurer the Board has several options.
You may have interest in working with a full service management company. This option provides the financial management and administrative functions as well as additional help in the form of a community manager. However, it is expensive and oftentimes communities became self-managed because they were tired of unresponsive service and financial reports that were inaccurate or not sent out regularly.
You can work with a CPA. CPA’s know accounting and one that specializes in community associations can be a real asset. The downside is they can be expensive as they have additional regulations and requirements they have to follow. Additionally, if they handle your audits they can’t do your bookkeeping as it’s a conflict of interest.
You can work with a bookkeeper. Bookkeepers tend to be less costly than working with a CPA. Unfortunately a bookkeeper doesn’t usually have expertise in community associations. Generally, due to cost, they don’t have community specific software systems with features that will help your board and unit owners. And lastly, they often are solo practitioners so there is no backup when they are out of the office which delays answers to questions.
There is one other option, you can work with a company that specializes in only providing financial and administrative support to community boards. It’s not free like having a volunteer do all the work. But you will save over 50% of the cost of full management and save time by having over 55% of the work of operating a community done.
Potential Added Benefits of Change
As the saying goes: “you don’t know what you don’t know”, you may be surprised that when you look at alternative services there may be awesome features that you didn’t know were available to you.
There are a lot of modern business tools available to community associations today. You may be able to update the way your community conducts business. Board members could save time with online bill review and approval without the hassle of being in town to sign physical checks. Unit owners could get a web portal to look up their account history and make a payment online.
A host of accounting and administrative tools could reduce the workload of the board and please unit owners at the same time. Hey this change thing may not be so bad!
Make a Safe Choice
Review your options and make a safe choice for your association. This is not a place to choose the cheapest option. Potential pitfalls such as loss of funds from improper collection practices as well as the potential for embezzlement make this decision critical.
Here are 4 items to keep in mind:
- Hire a vendor with specific Community Association Financial Management expertise & experience. Communities have declarations and bylaws and in some states regulations that need to be understood.
- Look for a vendor that uses systems that provide transparency and are geared to communities so you get the tools that will reduce the board’s workload.
- Are they licensed? A handful of states require a Community Association Manager, Real Estate Broker’s or Certified Public Accountant license to collect and supervise association funds.
- Hire a company that has Insurance – we’re not talking general business liability, although that is good, you need someone that has fidelity bond or a crime insurance policy. You want coverage that insures against an employee of the vendor stealing association money. Don’t forget to check with your state, some states have minimum coverage requirements.
One thing to keep in mind: proximity matters less than the 4 items listed above – they take precedence. Chose a service with these qualifications over whether the service is located in your area. Just like many credit card companies’ mail and process statements in places like Sioux Falls, Idaho, today it matters less where your common charges are mailed from and financial reports are generated. If the service has an office near you that’s an added bonus.
Summary
Don’t fear! Help is available when a trusted Treasurer leaves your association. You have options available to you. Change may not be so bad, you may even get new technology goodies out of the disruption. Remember instead of the cheapest price let your guide be safety and peace of mind. Happy hunting!