Keeping Your Budget Healthy During COVID-19

The financial repercussions of the COVID-19 pandemic continue to unfold, impacting households and communities in unforeseen ways. Many residents may find it challenging to meet assessment payments, while there is an increased need for expenses related to cleaning and safety measures.

As you prepare the budget for the upcoming year, identifying areas for cost-saving is crucial to counterbalance unexpected expenditures and potential revenue declines. A well-managed budget ensures the future stability of your community association. It’s imperative to fulfill the fiduciary responsibility to your fellow residents without increasing dues. Surprisingly, you can find ways to cut costs on budget items previously overlooked. By partnering with an adept property management company, you might not see immediate savings, but you can achieve better value over time. Such a partnership could provide access to resources and purchasing power that maximize your budget for long-term savings. Let’s explore some of these potential cost-saving areas.

Vendors and Benchmarking

Do you routinely review vendor contracts, or do they just automatically renew? Many board members are unsure if their management firms perform this essential task. This period calls for vigilance over complacency. By regularly evaluating contracts, you may discover savings opportunities or get more value for your money. Sometimes, using the leverage of your management company’s buying power can lead to vendor discounts or extended contracts at better rates.

Benchmarking is a valuable tool that compares the expenses of similar communities or buildings. Professional management companies often provide access to comprehensive data for accurate benchmarking. This process allows your association to gain insight into how your expenses compare with peers. For example, examining your landscaping costs against similar properties might reveal that your spending is significantly higher. With this knowledge in hand, your board can negotiate better pricing or enhanced services, providing more value to the community.

An association may unknowingly overpay for services year after year. By making a simple call to vendors, you can explore alternative pricing models that offer better deals. Annual contract evaluations are key to ensuring you’re getting the best price and value possible, especially during the challenging times brought on by the pandemic.

Associations that can negotiate effectively with vendors may also have advantages in securing hard-to-find supplies like disinfectants and personal protective equipment. Early in the COVID-19 crisis, disinfectants were scarce. Persistent communication with suppliers enabled some management companies to secure these supplies more efficiently than others.

Insurance and Investments

Consider how your reserve fund is allocated. Many board members lack confidence in their investment returns. Ensuring that your investments yield optimal returns and incur minimal fees is crucial. Through solid banking relationships, associations can often secure better investment rates and reduced fees, maximizing returns on their reserve funds.

When was your insurance policy last audited? Ensuring you have the appropriate coverage is vital, extending beyond just selecting the lowest premium option. Lower premiums might translate into higher deductibles or risky exclusions. It’s beneficial to work annually with your insurance broker to assess your coverage, ensure it’s comprehensive, and secure the best rate available.

Energy

Evaluate the energy consumption in your common areas. Are there spaces where unused lights remain on? Could adjusting the temperature of pools and hot tubs or air conditioning provide savings? Your management company should collaborate with local utility providers to conduct an energy audit. Identifying inefficiencies can lead to savings and increased value for your association.

The economic effects of the COVID-19 pandemic are long-lasting. Collaborating with a proficient management partner can help maintain your association's financial stability, ensuring you maximize the value of every dollar spent. This overview serves as a guide for communities to identify budget-saving opportunities effectively. Comments on these potential savings are intended as a viewpoint, offering ways to strengthen financial health.