Imagine sitting down with your significant other to pay the monthly bills. You both put your checks into a joint account and know how much there is to take care of expenses, or so you think. Out of his wallet your husband pulls out receipts for a new suit, dinner with his friends and a new part for the beat up old Chevy he’s rebuilding. You add receipts for a manicure, a brand new red dress that’s hanging in your closet and the liquid lunch that you had with your pals from work. Both of you look at the pile, each upset that the other wasn’t notified about all the extra spending, and wondering how you’re going to cover your household bills now.
Money—and the spending of it—is a topic that some people are very skittish about discussing. But when you’re a board member or the association manager, there’s no benefit to skirting financial realities just because they may be difficult or contentious.
Budgets and financial reports provide that crystal-clear picture of how the property is doing. From an investment perspective, it shows the shareholders, tenants, owners and board whether the property is profitable or not. Cynthia Graffeo, director of client relations at Argo Real Estate in New York City, says that what information the board shares about the building’s financial information will also depend on what’s been traditionally done in the past for that building.
“Finances are one of the biggest components of the building, so shareholders want to make sure the board is meeting their financial obligations,” says Graffeo. “You want to be open to them with annual financial statements and letters that explain when a board decides to increase the maintenance or do an assessment.”
Each month, a financial report should be generated to give the residents and the board an idea of where the building is at from a monetary standpoint. This report compares where the budget is to where it should be. In addition, it also has a listing of all the bills that were paid and the monies that were collected. In other words, anything financial that has happened that month should be in the report.