What Makes Condo & HOA Financial Management Expensive
A condo or homeowners’ association (HOA) going from full management to self-managed with Community Financials’ support experiences significant cost savings. However a self-managed community going from no cost to paying for a financial management service gets a new expense line item. Sometimes we get asked to answer what makes condo & HOA financial management expensive.
Again expensive is a relative. Going from paying zero to having to pay for service is a big jump. But think of it this way. If you went out to get a management company to provide “full management” you would pay significantly more. With Community Financials’ financial management and add on services you get probably 50% of the services provided by a property management company at less than 50% of the cost of “full management”.
A lot of services are included: mailing coupons or statements, depositing payments, providing online payments, mailing late letters, communicating with unit owners for accounting questions, communicating with a collection attorney, receiving and paying bills, communicating with vendors on payment inquiries, compiling the monthly financial statements, reconciling financial reports with bank statements, answering board questions on financial statements and more.
What Explains Any Difference in Competitor Fees
What causes higher fees for service from competitors? Some CPA firms have different regulations to follow as part of their traditional accounting business and have higher overhead and often charge higher fees for this service (if offered since many find it a conflict of interest if also auditing your books). A solo bookkeeper has lower overhead and may charge less but may not be that adept with community associations, or they may become overstretched or when on vacation you may not get responsive service and they don’t have a lot of online tools for the board and owners. In the middle is a company like Community Financials that has all the required licenses, the understanding of Condo and HOAs and can provide industry specific software and online tools.
Proper Staffing
In a service business people are the largest cost. To provide responsive service you need adequate people to answer the phones and they cost money. If you have experienced bad customer service it’s because the business chose not to spend money. Better more experienced staff (which often give better service) costs more to pay. Ever work with a company and it seems they had a revolving door with a new employee providing service frequently? This turnover is because the staff was not getting competitive compensation.
Training
Next you need to train the staff so they know what they are doing and can do a great job – training costs money and a lot of small businesses don’t invest in training. Plus it costs time – many businesses view this as unproductive time (a cost) – but it isn’t. Training is an investment that pays itself back many times over – especially with happy customers.
Additionally, training for community board members costs more. Does the company offer training in the form of video tutorials, screen sharing sessions to help boards navigate systems or periodic webinars? These cost money to develop but help boards get the most from the service.
Proper Insurance
Businesses with more safeguards for clients like having fidelity bonding or crime insurance coverage which further safeguards client funds costs the business more. But sleeping well at night knowing that the association funds are safe is worth it.
Condo and HOA Software
Lastly, better software systems that provide faster service for the staff and more online features for clients costs more. However, they are important in providing the transparency and 24/7 access that more owners want plus saves time required by board volunteers to fulfill their duties.
Summary
Keep these pricing and tradeoffs in mind as you qualify service providers. And don’t be surprised if a few board member raise eyebrows if you are going from zero expense (a volunteer doing the work) to a new expense by a third party. No doubt you will get new safeguards (ie. online bill approval by 2 board members) and features (ie. online payments) that are not available from a volunteer Treasurer when hiring a third party that make paying a fee more palatable for some used to paying nothing. By understanding what goes into providing a service you will learn what makes condo & HOA financial management expensive.
