Halloween is right around the corner, and the scares are everywhere! Ghosts! Goblins! BUDGET SEASON!
*insert Wilhelm Scream here*
Okay, it’s not that bad, but budget season IS coming to a close, and we know first-hand the kind of stress that can cause. Don’t worry! Take a deep breath, grab a Milky Way, and settle in. We’re here to help make your budgeting a little bit easier!
Budgeting Made Simple
Budgeting shouldn’t be a horror story. It’s just a financial framework to work within for the coming fiscal year, and it’s done to avoid costly special assessments for homeowners. A budget should predict the community Expenses, Reserves, and Income, with the Income covering the Expenses and Reserve contribution. Following these steps is a great way to make sure you tick off every box on your budget to-do list:
1. Prepare an Operating Plan
The operating plan is like a business plan for the community. What do I mean by a community business plan? It simply means a written plan listing the goals, activities and events for the new budget year. Some of the line items in the plan will affect income and expenses, while others are just activities and events that may not have dollars attached to them—but need to be listed on the business plan as reminders or To Do’s.
2. Solicit Requests for Proposals (RFPs)
This allows you to budget ‘hard’ numbers for estimated expenses and major contracts coming up in the year that have the most impact on the budget.
3. Assess Community Maintenance Needs
To assess the maintenance needs of the community, take a look back at the actual expenses incurred so far for maintenance and repair items, as well as what utility expenses have been running from month-to-month. This will give you a snapshot of what your maintenance costs should look like annually (unless of course major expenses occurred in the last fiscal year, such as roof replacement or pool upkeep).
4. Analyze Reserve Funds
If your community does not already have a reserve analysis, or it has not been updated in a while, we highly recommend commissioning an updated reserve study as part of the annual budget process.
The Reserve Analysis (also called Reserve Study) predicts the lifetime of all of the major equipment and building elements in the community to determine when they will need to be repaired or replaced.
5. Put Together a Draft Budget
Using a spreadsheet application, like Excel, begin entering the known expenses. Enter estimated expenses, like utilities, common area maintenance and repair costs, snow removal, and any RFPs that have already come back to you.
Using the RFP’s, reviewing this past year’s budget, the approved Operating Plan, along with looking at the actual expenses year-to-date should help determine the amounts to budget for each line item of expense. The goal is to determine the total projected expenses for the community for the upcoming budget year.
6. Determine Income (Assessments)
The amount of income the community must generate has to cover the budgeted expenses and the reserve contribution. That’s why determining the expense level as well as updating the Reserve Contribution, as needed, is so important. Nobody wants to pay a higher assessment level for the upcoming year, including the board members, unless it is absolutely necessary.
Of course, all of this is a lot easier said than done, and there is a lot more to budget season than this quick breakdown. So, faster than a speeding bullet, TOPS is ready to deliver what you need! TOPS [ONE] has a lot of neat features to make the steps above run smoothly, and CAM Survival Budget Guide is a tried and true industry resource for all things budget-related!
For my First Trick…
The Budget Tool in TOPS [ONE] is a bit of a magician—it has the ability to export a useful budgeting template into Excel (for you to fill in quickly and easily) and the ability to import that newly fleshed-out template back in, making your budgeting safe and simple. And it’s smart! If something isn’t quite right (I personally tend to completely skip over some of the number keys on my keyboard), the import function can tell, and will throw out an error dialogue box, and will not import a bad file. Instead, it will provide a download that will include a new column that defines which errors occurred and where. This way, everything you’re bringing in to your budget in the software is functional.
Formula 1 Financials
Maybe Excel isn’t your thing, though. If all those little boxes give you the heebie jeebies, manual is always an option, too! Instead of exporting an Excel spreadsheet and importing it back into TOPS [ONE], going straight into your budget tool gives you the option to manually directly input your budget. Don’t worry, it’s pretty smart, too. TOPS [ONE] gives you the ability to input specific amounts into a variety of budget item lines, and then will auto-distribute that amount into the fields in that budget line item.
Rock Star Reporting
The real star of the show might actually be the reporting functionality. While not part of the budgeting tool specifically, it’s a feature that makes budget presentations a snap, and is completely customizable. Under the Report section of TOPS [ONE] is the Budget section. From here, TOPS [ONE] users can pick and choose what budget aspects they want to report on for the fiscal year. Maybe you want a report that doesn’t include any $0 line items. Or maybe you want the budget items alphabetized. Or sorted from highest to lowest. Maybe all of the above? And once you’ve finalized your ideal budget report, you can export it to a PDF and have it ready to go during your next budget meeting.