There are different types of software products and methods for HOA Management Accounting Services. What is sometimes misunderstood is the difference between standard accounting for business and CAM accounting. This article touches on the difference and an overview of accounting.
Accounting the Wrong Way
Let’s start by going over the incorrect way to handle accounting. First; don’t assume revenue exists until the service or item has been sold and you have the money. In goods and services accounting, budgets work as mostly a guideline or look at the past to work toward goals in profitability.
However, this is different for CAM accounting. A community association with a good financial standing will have a good budget. Everything for CAM accounting, such as vendor contracts, maintenance costs, and management fees, will be budgeted strictly. Basically, a combination of non-profit accounting and small government is what makes up CAM accounting. Here is how it relates to each.
Non-Profit Accounting Vs. CAM Accounting
Accounting for a community association is similar to non-profit accounting in that the budgets tends to be very strict and include a reserve fund to avoid having to transfer anything owed over as dues to the homeowner as “special assessments”, which does not make the homeowners very happy. Non-profits will do the same but the savings will be for unexpected or larger costs, such as repairs or replacements.
Small Government Accounting Vs. CAM Accounting
A community association resembles a government as far as money goes because it is funded by those who live within the community. Once a home has been completed, there are few other sources money is coming from. For this reason, the money amount collected from homeowners is predictable because you’ll know the exact amount expected to be received.
CAM Accounting for Community Associations is made up of a strong budget and knowing where every fund is so that owners aren’t over-charged but you’re also prepared for emergencies and repairs that come up.