Sequence of Events for Changing HOA or Condo Management or Accounting Companies

I recently received a question from a prospect that I wanted to answer on this post that relates to the process and timeline for changing accounting services.  Whether you are switching from full-management to self-management with support or from another accounting service I hope this helps answer the question regarding the sequence of events for changing HOA or Condo Management or accounting companies.

Question:

Please let me know what is the right sequence of events. Do we hire Community Financials first or do we let the current HOA Management Company know we are breaking the relationship? Who collects/transfers all documents from them to you? Do we do that or do they have to send everything to you once we advise them of the change? Please advise

Answer:

The first place to start is for your board to have reviewed our proposal and our service agreement, had your questions answered and decided to work with us.

Next the timing for notification depends on your current management agreement – has it expired, is it ending at the end of the month?  Is it mid-term and you have to give 60-day notice?  If it is mid-term, you’ll want to look at the termination paragraph of the contract.  Most companies allow for terminating with written notice in 60-90 days (sometimes they are willing for it to be sooner if you ask).

That being said, we have worked with many new customers that gave notice because they were through with poor service and paying a high price from their management company and then used the 60-90 day notice period to find a replacement service.

You can sign an agreement with Community Financials with a start date that either 1) starts the day after the current company ends or 2) overlaps with the current company by 30 days if you are concerned that the outgoing company will not cooperate fully (90% of the companies cooperate fully so it is not necessary but you know your company better than we do).

My team will work to liaise with the outgoing management or accounting company directly to get information we need to on-board your community.  If they are uncooperative or unresponsive, we may need info from the board.  Additional info from the board will also be required.  We have an on-boarding checklist that you fill out with who on the board will approve bills, who will be signers on the bank account, etc.  Also, you’ll be in touch with the outgoing company to get any physical files – sometimes the company will forget and forward us checks that owners sent there by accident as well as any bills so you can forward to us when you discover this in the files they turn over.  Sometimes the board will email us PDFs of information that they have collected or that they find in the files that may be useful like meeting minutes, reserve reports, etc.

We will start setting up your community in our software after we receive a signed agreement and our on-boarding checklist with your answers to questions like your tax ID, fiscal year end, etc.

We will want to get reports like a homeowner list with offsite addresses and emails, assessment amounts per owner as well as a vendor list from your outgoing company’s system in excel format.  This will make on-boarding faster.

Next up we’ll mail out a letter to all your vendors to change their billing address so invoices come to us.  Then we will mail out a welcome letter to owners with payment options, our contact info and how owners can set up online access.

If we are mailing or emailing out monthly statements as well this typically happens separately from the welcome letter as we may try to get updated payment information from the outgoing company.  Also, the first invoice we send out usually does not have any prior balances or credits reflected on them due to the timing of information we receive from the outgoing manager.  By the time the next billing cycle happens this is fixed up. This depends on how much lead time we have for the on-boarding.

If you have any other questions regarding the transition please feel free to contact us and we’ll be happy to answer them in detail.