Overseeing the finances of your self managed HOA is one of the most time consuming and detail oriented responsibilities necessary to keep your organization afloat. Reconciling your HOA’s bank account comprises an important part of supervising the organization’s finances. 

Performing a regular bank reconciliation will benefit your HOA by checking the accuracy of its financial records to monitor and control cash flow. With timely and thorough bank reconciliations, your HOA can operate confidently knowing its finances are handled correctly, allowing the organization’s financial health to operate at a high level. 

Studies show that bank reconciliations establish accountability for the institutions that use them and affect profitability in positive ways. HOA management software supports organizations aiming to provide financial stability to their community with an easy to use, holistic platform that facilitates bank reconciliations. 

Table of Contents: 

What is Bank Reconciliation? 

How to Reconcile Bank Accounts 

How Does HOA Management Software Assist with Bank Reconciliation? 

What is Bank Reconciliation? 

Bank reconciliation is the process of updating your bank statements and accounting records so that both ending balances match one another. Even though it may seem as if both totals should or will be the same without any intervention, various things happen throughout the banking period resulting in different final amounts. 

Regular occurrences like undeposited or pending checks, miscellaneous fees, or unaccounted for charges often result in different totals, necessitating bank reconciliation. Through this process, the HOA recognizes the reasons for the differences and updates or addresses them appropriately. 

It is critical that your HOA’s financial records are as accurate as possible, and bank reconciliation is an important contributing piece within that precision. Maintaining meticulous records also assists in preparing your HOA for its annual audit. 

Mistakes and discrepancies are inevitable for any organization, so bank reconciliation provides a time to address these errors and correct them. It also offers the opportunity for your HOA to identify larger issues like fraud or theft within the organization. 

Bank reconciliations also confirm expenses have been paid for and deposits have cleared, ensuring your HOA is working within its budget and available funds. This ensures the HOA remains compliant when spending homeowner dues and community funds. 

How to Reconcile Bank Accounts 

Anyone can perform a bank reconciliation, even without an accounting education or experience. With an eye for detail, focused time, and your HOA’s financial statements, you can reconcile your HOA’s bank accounts without any special equipment or software. 

You will need bank statements for the current and previous month and your HOA’s own bookkeeping records where its expenses are categorized and listed. First, note the differences between each statement: any contradictory totals, debits, or credits. From there you can analyze the discrepancies and adjust. 

Processing or late fees, outstanding checks, pending charges, and interest earned are regular contributors to differing totals between the bank’s record and yours. All charges should be accounted for as part of the HOA’s budget and checked for legitimacy to prevent fraud within the organization. 

Any outstanding credit or debit transactions should be noted in the bank reconciliation as well. Charges that have not been processed yet should be noted in the statement to accurately account for the money on both the bank statement, financial records, and the bank reconciliation document. 

For example, a check written on January 31st will most likely not be cleared in time for the January bank statement, but the HOA will mark the debit transaction for that month. During the reconciliation process, you would deduct this amount from that month’s bank statement to account for the expense. 

Your HOA should reconcile its bank accounts within thirty days of receiving its monthly statement. This ensures that your HOA is working with the  most accurate and up-to-date information. 

Reconciling bank statements at the beginning or end of each month confirms you are operating within your HOA’s budget. A timely reconciliation also ensures that your HOA is aware of any major discrepancies as soon as they appear. 

How Does HOA Management Software Assist with Bank Reconciliation? 

Since it is specifically designed for HOAs with the needs of HOAs in mind, HOA management software offers features and capabilities that general accounting software can’t accommodate. HOA management software provides a holistic solution to perform regular bank reconciliations with ease and speed, making this task less tedious and daunting each month. 

Reconciling bank accounts can be a very time-consuming process to complete if manually comparing spreadsheets with bank printouts. While possible to do accurately, this method also leaves lots of room for human error. HOA management software eliminates the need for all of the paper by offering features specifically for bank reconciliation.

Most importantly, PayHOA automatically syncs your HOA’s bank statement with your account to list your most up-to-date transaction information. This removes the need for any data entry into your HOA’s system of record. You can simply login to your HOA management software and begin analyzing your finances. 

HOA management software provides tools to make this process easier, including a specific bank reconciliation tool to verify transactions marked by the HOA against transactions logged by your bank. From here, you can generate a report to easily address any discrepancies. 

PayHOA’s reconciliation tool saves your HOA the time of combing through financial records. It shows the differences for you, allowing you to simply analyze and correct any differences immediately. This allows any HOA volunteer to reconcile the bank accounts with ease. 

You can save the reconciliation reports to compare monthly to look for patterns and possibly find repeating errors that could point to larger issues. Regularly misattributed charges can sometimes expose an untrustworthy party within the HOA. 

Other financial reports available within HOA management software can be cross-referenced to help ensure holistic financial health. Together with a reconciled bank account, these reports prepare you for your HOA’s annual audit, and keep the organization on budget by minimizing risks and mistakes. 

Reconciling your bank accounts ultimately allows for financial transparency within your community, which creates trust that your organization is operating on a solid foundation. Homeowners put their future in the hands of the HOA, so the HOA has a responsibility to protect the community’s finances. 

PayHOA offers an HOA management software solution for HOAs of any size or managerial priorities. To find out if PayHOA fits all your HOA management needs, try our software free for 30 days.