self manage

Hi

for those that self manage, how do you do your invoicing, payroll, and accounting?

Thanks

Townhouse community. No amenities.
We gradually moved from full MC-managed to self-managed.
Step 1. Vendor contracting and management.
Step 2. Homeowner communications.
Step 3. Banking.

Never wanted to bring accounting functions in house. Tried several variations of finance-only services with traditional MCs. Dissatisfied with all. Finally contracted with our auditors to take over bookkeeping instead of being our auditors. Working fine for the last 5 years.

Bookkeepers have full access to operating account, but no access to reserve account. We have a rider on our HOA insurance that covers our bookkeepers on around 60% of what's in our operating account. (100% coverage for HOA people.)

Bookkeepers are supposed to do 2 signatures on all checks they write, but (1) banks today do will process 1-signer checks, and (2) most of our vendors are fixed rate monthly.

We get copies of bank statements directly from banks.

We have direct full visibility into bookkeepers' computer system for our account. We can generate reports from their system on-demand.

We do our own budgeting.

As Sheila says, much depends on skills of members.

I think there is a need for a company/MC that does financials only especially for those associations that lend themselves to self management. My suggestion would be to not even call yourself an MC when doing financials only as it could get confusing. Maybe a play on the words of your present company. Ours MC changed there name a bit from SO and SO Property Management Services to SO and SO Real Estate Services.

90% of what our MC does for us is our financials. Collect dues, (via a bank lock box) pay our bills and present monthly financial reports. We on the BOD handle no money nor invoices.

When we were looking for a financials-only model some 8 years ago, we had a splintered Board.

It was near impossible to convince 2 of 5 Board members to lose the MC buffer between the homeowners and the Board, even though the other 3 members were taking on the "full service" responsibilities because the service levels weren't satisfactory.

Our 2 Board members in the minority just wanted to make sure that everything was taken care of by someone else, and they didn't want to be part of any big decisions that could lay fault on their shoulders. Their persistent question was "What if self-management doesn't work?"

A 3-2 split on a major transformation would have made our Board dysfunctional.

So the group of 3 reached out to a number of "full service" firms, offered to pay full rate for 6 months, and to then renegotiate an appropriate rate based on actual activity. That way, the group of 2 would have the fall-back of a full service MC. And the MC could cover costs and make a profit.

The problem was that MCs agreed to take us as we asked, but ultimately they did not have a clear delineation within their own operations. All of them were stronger on the front-end than they were on the back-end. The PMs (which we didn't need) pressured the MC's accounting teams to devote all energy toward their accounts. And the accounting groups were never adequately staffed. As a result, we were 2nd class citizens every time.

We burned through several MCs that way.

Our last MC before going full self-managed was a national financials-only firm that wound up being a disaster. The up front promises of what they could do did not match reality. For example, we have both Monthly and Quarterly fees. Their sales folks said it could be done a certain way. They showed us a dummy demo and we signed on. But once we switched, the ops folks said it couldn't be done as promised. (Instead of having one account, each homeowner was given two accounts - but payments were often applied to the wrong account, sometimes issuing double credit for one payment.)

I'm sure that technology and MC organizations have changed since the time we were looking. If we started our search today, we would be attracted to any firm who understood that financials-only needs its own back-room staff that is independent of the traditional PM-based system that dominated the landscape back then. I applaud those of you who have come to the realization that financials-only needs to be recognized and treated as a separate business, both internally and externally.

Thanks Tim. Just wondering -

1. Who does it now?

2. Nothing personal, under your old system, I would be uncomfortable that there was no separation of responsibility. IMO, should have different people in Treasurer, Receivables processing, and Payables processing positions.

CPA firm also. We pay around $550 including software licensing fee.

Our HOA is patio homes, 112 owners (40 duplexes and 32 single), no amenities, city water and sewage.

We do lend our self to self management but no one, myself included and I am VP/Treasurer, wants to take the time/effort to do the transition and work so we have a financials only (couple of other small tasks) MC. His charge is $5.80 per door, per month which is $650 per month.

If some owner(s) came along and were willing to do the work for us to be self managed, I could support it but no one has ever questioned us about this, never mind come forward with a plan, so I say let the sleeping dog sleep.