Electronic Bill Pay & 22 year old governing documents

We are a small HOA with governing documents that remain largely unchanged in the past 22 years. I am the Treasurer.

The by-laws require that both the Treasurer and the President sign checks. Now that we live in the more convenient world of electronic bill-pay and because we are a volunteer organization, I would like to use electronic bill-pay.

Obviously, the goal of this two signature requirement was to minimize the risk of the Treasurer stealing the HOA's money. As I've told the Board, two signatures generally didn't prevent anything because no bank really validates signatures on checks any more.

So, two years ago, I contacted our bank, Wachovia and spoke with their small business unit. I explained that it would be great if they had an account type that would require two approvals to make a single payment. The person said "great idea"! But nothing has ever come of it.

In the community associations website (http://www.communityassociations.net/weblog/archives/2007/02/time_to_check_t.html), "joewest" mentions "You can also set up electronic approvals, so that when a check is authorized, another party has to log in to the account and approve the transaction before the money is sent."

I know of no bank that provides this service. Does anyone know a bank that is doing this???

Thank you!

Mitch

The issue is of "checks and balances". The reason that our governing document required two signatures was to ensure that two people had to approve any expense (reducing the possibility of the Treasurer stealing money between financial reports (quarterly) or CPA audits.

It's not that the problem would not eventually be exposed, it's about using functionality that we're hoping to find in a banking website to ensure it can't happen in the first place.

So ... with the advent of electronic bill pay and with the possibility of having an account that can require dual approval for an online payment, we would be able to have appropriate checks and balances (i.e. the Treasurer can't spend a dime without approval from another officer - say either the President or VP).

Thank you for the information ... can you be specific about who is providing that service? Do you have a website?

I agree with Susan on this.

If the entire board approves a motion to allow for electronic bill paying (or automatic deduction) of specific recurring bills, I don't see a checks and balances issue.

For example, the utility bills can often be set up for automatic ebill paying.

Once the board approves the procedure, it not only has "two" signoffs, but however many on the board approved the motion.

Mitch - I also tend to agree with Susan and Michelle in that such a online bill approval system may be overkill for you. What would actually be easier would be just to grant all board members access to the online banking (not the bill pay itself) so they can see what is coming and going out of the accounts at any time. This capability becomes the checks and balances.

Modify your by-laws. Just because there have been few changes for 22 years doesn't mean that you can't change them now.

I would change the bylaws to setup for a system of checks and balances. For insense you could allow for the treasurer to pay bills online. But then require the president or other board member to log in on a monthly basis to verify that nothing has been paid that was not previously authorized.

I would also have the statements sent to a box that the treasurer is not to have access to.

You might want to take a few minutes to check with other banks. What is offered will vary from bank to bank. I am not saying you have a bad bank, but you might find another will have the services you want.

Mitch - one other thought on this that might also be an alternative to the $180/user/year for bill.com

I personally (not HOA) use Wachovia as my bank so I'm familiar with their capabilities. And while it's true that once someone has online access to the account(s), you can't restrict function, the online bill paying process can be accomplished EITHER from within the Wachovia account or externally from financial software synchronization.

So for example, I never signed up for Wachovia's online bill pay, but they accept the online bill pay instructions as synchronized from Quicken. If I'm not mistaken, the same can be accomplished from QuickBooks (probably more suited to HOA than Quicken) - and perhaps other small business finanacial software as well.