Identifying and Rectifying Association Overspending
Finances are a huge consideration for community association boards and managers. It takes money—and sometimes lots of it—to keep a community or condominium building up to high standards and running smoothly. If you manage an association or serve on your association’s board of directors, you already know that almost everything you do depends to some degree on whether you have a budget that you can work with realistically. But reining in costs and keeping them as low as possible without compromising quality can be tough, especially if your association is operating on a shoestring budget.
Efficiency and making sure that expenditures aren’t unnecessarily high is key for saving money for community associations. There are some signs that the board of directors of an association and its manager should watch out for that indicate overspending within the community. And there are steps you can take to address this. But it requires communication to solve this problem.
So how can you identify this problem? The monthly financial package is the best place to look, especially the budget variance report. That’s why it’s so important to have an accurate budget, and for at least one board member—usually the treasurer—to review the reporting package each month.
The variance report can help boards and managers identify a variety of potential issues, including overspending, collections, and accounting mistakes. The earlier the issue is identified, the better the chance of correcting problems or mistakes before they become catastrophic.
For more ways to cut spending and choose a management company that will help further these goals, see “Rein in Association Expenditures to Keep Costs Low, Members Happy,” available to subscribers here.