Top 5 Tips for HOA Cost Savings

Top 5 Tips For HOA Cost Reduction

1. Real-Time Oversight

Monthly vs. Real-Time Reporting: We know many HOAs rely on monthly reporting. How often is at least one report delayed? What if a crucial piece of data is missing which prevents you from seeing the overall picture? How granular should reports be? Do you opt for monthly reports to avoid excessive costs and information overload?

HOA Software: Automating all your reporting with HOA software will reduce costs compared to manual accounting. Automation can be provided by your Community Manager, or software can be purchased directly and shared with your Community Manager. This allows for real-time reporting at any level of granularity. View Ledgers and the Trial Balance and spot discrepencies quickly. Keep track of divergences between the approved and actual budget. A stitch in time saves nine and also reduces the likelihood of internal fraud.

Real-Time Payment and Ageing Reports: These will allow you to manage accounts payable and arrears in a more efficient and effective manner. We cannot manage what we do not measure.

2. Replace Ballot Postage with E-Signing

Annual Board Meetings and Proxies: How much do you spend annually on postage? Mailing out ballots and receipts can cost over $1,000 for large HOAs. Switch to E-Signing as a secure and cost-effective alternative. Make sure E-Signing is part of your HOA software.

Messaging: Instead of posting newsletters send by e-mail. For confidential discussions make sure your software connects you directly to owners and provides encrypted messaging.

3. Vendors: Approvals, Fees & Invoicing

Vendor Approval: Do you hold a preferred suppliers list? Do suppliers register with you and have all their labour rates (fixed/hourly/overtime/call-out charges and incremental billing) approved in advance before they are offered work orders? When placing work orders do you approve all material costs upfront? Do you have real-time access to compare suppliers by cost? Who validates their invoice?

Switch to HOA software to manage supplier onboarding, supplier fee and materials approvals, to place orders through approved suppliers, allow for owners to place orders directly and leave feedback, and obtain system-generated invoicing to ensure accuracy and reduce multiple fraud risks.

Competitive Bids: Larger and more expensive projects, such as landscaping, could be put out to competitive tender but you will need a system capable of collating and managing the bids.

Limit the opportunity for collusion/backhanders: Suppose a Board Member does not declare a relationship with a vendor. A vendor could bill higher labour and material pricing and perhaps offer fee splits, which would violate HOA laws.

Preventative Maintenance: Plan and budget for preventative maintenance as this will save considerable expense in the long-run. Maintain a check-list and ensure you carry out community-wide inspections at least annually.

Review Contracts Annually: Re-evaluate vendor contracts annually regardless of whether they request pricing increases. Make sure their fees remain competitive. This should include general contractors, utility and telecommunication providers as well as insurers. Use your collective bargaining power to strike up favourable deals. Make sure to ask about volume discounts. Sometimes switching provider can include introductory offers - your current provider may offer an incentive to keep your business.

Lawsuits vs Liens: For small uncollected bills a lien may be more cost-effective than legal fees, especially if a delinquent homeowner is going through foreclosure or bankruptcy.

4. Invoicing: Reduce Phishing Risk

Are we at risk? Sadly nowadays - yes. Phishing is a mailing attack where a hacker might access a vendor's e-mail, or might "spoof" and send an email that appears to come from the vendor. Suppose an invoice, relating to a recent work order, is sent this way from a hacker. How would you detect this was not the legitimate sender? If you do not, you would be wiring the hacker's bank account and this could be repeated multiple times. The only sure solution is to restrict all invoicing to a secure portal for both HOA and Vendors. This ensures you view only legitimate invoices.

5. Daily Management

Automation Reduces the Admin Burden: Automating as many business processes as possible reduces headcount by reducing the Admin burden, allowing staff to concentrate on managing. Staff can rely on real-time alerts, direct messaging and team-wide Task lists to stay in control.