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Condominium Fiscal Planning
Like any successful corporation, condo boards in the Alberta area need to perform extensive fiscal planning; it’s always better to plan than to react. If you employ best practices, this process will go easier and smoothly. So where to begin when planning best practices for condo boards?
You should start by analyzing the previous year’s budget and what your current monthly statements reflect, do you have surplus or a deficit for this current month? The next step is to do a projected budget for the remaining months of this year to see where you are going to end up come your year end. Are you still in a deficit? Do you have a surplus now? If you have a deficit at the end of the year, you legally have to recoup that shortfall in the next year’s budget. You also shouldn’t just look at the basics, like the cost of cleaning services or landscaping. Rather, you should look at the big picture, including all revenues, expenses, increases in contracts and the recent reserve fund plan.
To some, this all may seem a daunting task. However, help is not far away. You can always hire a professional property management services company to help walk you through each necessary task or report.
Best Practices for Condo Boards: Reserve Funds
As mentioned earlier, the second part of the budget is the reserve account; which is for capital projects like roof replacement, eves-trough replacement, roadway cracks, plumbing/heating boiler updates. Notice how there is the words “replacement or updates”, those words are very important when discussing where the money to pay for these projects is to come from. If you are doing a “repair” big or small, the word “repair” normally suggests an operating expense instead of a reserve expense. Contributing condominium fees into the reserve fund each month is a requirement as per the Condominium Act of Alberta. This must be done to fund the reserve account regularly, so that the money will be there when you need it most.
Managing and Sticking to a Budget
Once your budget is set, stick to it as much as possible. You may be tempted to take the easier way out and just reuse last year’s budget. Don’t do it. You need to examine the actual costs from the previous year and review what your actual revenue was as well. Again, a professional management company can help you sort through the historical information and translate it into an accurate prediction of financial needs in the coming year.