How much to keep in Operating Expense Checking Account?

Started by RayG3 • 1 replies • 1010 views

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RayG3 (California)
Posts: 5

Posted:

In our HOA, we have a checking account designated for operating expenses as expected for all HOAs.

Is there a rule or recommendation to figure out how much balance the checking account should have? For example, should the account have an average balance of 30% above the average monthly expenses? Should it be more?

Thanks,

Ray
California

TimB4 (Tennessee)
Posts: 21,059

Posted:

As treasurer for my Association, I start each year (Jan 1) with one months bills balance in the account. For us, this equates to $3,000. Now, with some paying January assessments in December, the actual amount is typically higher.

I do not worry about fluctuations below that amount throughout the year. Fluctuations naturally happen due timing of paying bills and making deposits.

Our account has dropped to $500 at times.

Now, if your Association has a high delinquency rate, then you might want 2 months buffer at the beginning of the year (vs. 1 month).

What I wouldn't do is worry about a minimum balance unless that is a requirement set by the bank to avoid fees.

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