Some HOAs still manually manage finances for their reserve fund. Tediously entering numbers into their excel sheets and trying to reconcile tens of thousands of dollars to produce an accurate reserve fund report.

It’s a dated approach to a continually evolving financial HOA environment.

Did you know in the USA, HOA reserves have totaled over $25 billion worth of assessments since 2020?

Table of contents

• When you don’t have enough time
• Software saves you time
• When your numbers don’t add up
• Software ensures financial accuracy
• When financial records are chaotic
• Software delivers efficient record keeping
• When communication is lacking
• Software opens the lines of communication
• When you are unsure of the future of your reserve fund
• Software helps you plan and forecast
• Software improves HOA reserve fund management

Managing this significant volume of finances by volunteers who may not have the capacity nor ability to do so requires support. That support often comes in the form of software.

Software eliminates human error, keeps financial data at your fingertips, and helps HOAs manage complex financial tasks related to reserve fund management.

According to statistics, the global accounting software market will be worth $11.7 million by 2026.

Financial software is necessary for both both small and large operations.

Now is the time to let go of old, outdated systems and processes and take advantage of today’s technology.

Let’s look at some of the issues that arise when trying to manage HOA reserve funds and how software can make necessary improvements.

When you don’t have enough time

Crunching numbers, big numbers, for a community of many households is neither a quick nor easy task.

Often, the HOA board, composed of volunteers elected to their position, also have full-time jobs and other obligations that can keep them from giving the many hours of consistent attention, updates and revisions that reserve fund management needs to make sure numbers are current and accurate.

You don’t want something as important your reserve fund management falling into disarray just because board members don’t have enough time to make sure its managed well.

Software saves you time

Time is a commodity everyone needs to manage well, because once it’s gone, you never get it back.

When you use software, it will automate financial tasks and streamline your financial processes like easily separating deposits into your operations fund and your reserve fund.  Use it as a tool to pull detailed reports quickly such as profit and loss statements and balance sheets.

You’ll stop wasting time you don’t have to spare trying to pull all the numbers together; the rights software does for you.

Then you can spend your time making important decisions about how best to manage the community’s reserve fund instead of manually pulling a multitude of reports.

When your numbers don’t add up  

HOAs that are still relying on excel files to manage their HOA reserve fund can be putting themselves at a disadvantage because excel only reflects the data someone manually entered. That data could be incorrect because of a simple data entry mistake.

For example, imagine someone enters $10.00 instead of $100.00 for reserve fund monthly fees. And this error is carried over from spread sheet to spread sheet for months.  The outcome is that this simple mistake makes it look like your reserve fund is coming up short! And then the board will arrive at wrong conclusions and can’t make the best decisions for the community.

Software ensures financial accuracy  

The right HOA software can automatically imports and inserts accurate financial transactions to your reserve fund such as:

• Payments
• Invoices
• Receipts and more.

With the software’s ability to automate data entry, you can avoid common mistakes due to human error.  

When financial records are chaotic

A successful HOA usually has a good process for keeping financial records. However, there are always times when items and notes are  just scribbled down on paper with the intention of adding them to financial records later.

The problem is that sometimes that information gets lost and is never added. This leads to discrepancies and financial statements that can’t be reconciled.

Software delivers efficient record keeping

To create clarity, and predictability in your financial records your HOA board should consider making the transition to digital record keeping.

Documenting your financial information on a secure, reliable, and user-friendly platform is critical to the security and well-being of your HOA.  It is impossible to plan if you cannot obtain an accurate account of what and where your financial records are because they are filed in someone’s cabinet.

The best way to make important financial decisions about your reserve fund is to have reliable financial records.

Digital financial records maintained and kept in one platform are more secure because they are hard to manipulate, easy to maintain and protect.

A software that includes a file library feature lets you keep all your important files organized in a centralized location. You can upload an unlimited number of files relating to your reserve fund and manage access levels, so the board is able to see certain documents, while property management and homeowners see only certain documents that you give them access to.

Digital record keeping allows you to control who has access to your files, and with the right software you can have access to those records wherever you are and as often as you want, when you have a smart device and access to Wi-Fi.  

When communication is lacking

The inability to communicate about finances clearly and quickly to homeowners is a fault in reserve fund management that will not be overlooked.

Part of an HOA board’s responsibility is to keep residents in the know about the state of the community’s finances at regular intervals and at any time a homeowner inquires about the reserve fund.

Homeowners need to know as soon as possible and in a coherent way what is transpiring with their fees and whether changes might be on the horizon. Doing this slowly and manually only implies that reserve fund management is not being done well.

Software opens the lines of communication

Staying connected with residents helps HOAs gain trust and respect. Financial reserve fund updates done through software is a great way to be transparent with residents and communicate in a timely manner.

Consider a quarterly digital newsletter or email. Digital news blasts go out to everyone with speed and can be referred back to quickly; while paper announcements are too often discarded, get misplaced and anyone can just pick it up and look at it.

However, your software will send emails and newsletters directly to your resident’s smart devices. You can even include an option for recipients to reply back with a question or add a poll for residents to share their thoughts.   

Did you know you can also use software to host town halls virtually?  This option is great for those who can’t attend in person and gives every resident the opportunity to hear, speak, and understand how your reserve fund is being managed to build a strong HOA reserve fund and community.

Communication grows exponentially with the use of software.

When you are unsure of the future of your reserve fund 

Reserve funds are established for the purpose of emergency and unexpected expenses, such as new roofs, or repairing damage in common areas like flooding. Sometimes, HOAs are able to anticipate a major expense based on a reserve study.  However, many times the expenses are more expensive than anticipated due to variables in:

• Inflation
• Cost of services
• Cost of materials

This can make it very difficult to build a future healthy reserve fund five, 10 and 15 years into the future.

Software helps you plan and forecast

A financial management software tool helps you plan and make projections into the future reserve fund budget. You’ll be able to anticipate future financial reserve fund needs and put enough funds aside for the future, and avoid special assessments.

For example, you can create scenarios in the sotware where you use current reserve fund fees and increase them over time to account for the above-mentioned variables to produce accurate, dependable forecasts that give you insight and predictability of the health of your reserve reserve fund.

This type of flexibility available through financial software will help you achieve your required percent funded metric.

Software improves HOA reserve fund management

Managing an HOA fund of tens of thousands of dollars cannot be left to outdated processes and systems. Software is the tool needed to manage the fund and to reflect the best fiduciary responsibility.  

HOAs should lean on software because it helps you:

• Save time
• Increase accuracy and reliability
• Streamlines financial tasks
• Opens lines of communication
• Plan reliable forecasts

Improved financial visibility and analysis in real time are substantial outcomes that benefit reserve fund management.  

It can make the difference between a prepared community and a mismanaged one. An HOA that struggles to maintain an accurate and healthy reserve fund leads to other financial challenges.  

Modern HOAs don’t waste time and money logging expenses and managing reserves manually. They make the switch to user friendly software as a solution to reserve fund management issues and take advantage of today’s software capabilities and technology.