Unforeseen expenses can spring up anytime of the year, making you want to tighten your association’s budget. However there are ways to stretch the community budget while maintaining current obligations. “When it comes to saving money, you have to fish where the big fish are,” says Mitch Drimmer, vice president of business development at Snap Collections by Association Financial Services, a collections and financial services company based in Miami. Drimmer’s comment refers to the necessity of cutting bigger expenses out of the budget. “Make a pie chart and see what the big piece is,” he says.
Discuss Insurance Options with your agent.
Usually, insurance is usually an association’s largest expense, and it’s important to have the proper coverage. However, there are several changes in the insurance world, and it may benefit your community to do an annual review of coverage options.
The association can find ways to eliminate extras. Can you reduce operational hours to save money? Look to balance your costs with the greater good of the community. While you may be able to spare pricier expenses such as expensive additions, don’t skimp on regular maintenance. Nor should you cut back on funding reserves when faced with a shrinking budget. This practice is fiscally irresponsible, creating problems for current and future buyers when reserve funding is needed.
Manage your Water Use.
According to a study by the South Florida Water Management District, Floridians use about 6.5 billion gallons of freshwater daily, and the average person living in Florida pays about $60 per month for water service—much of it needlessly. “A lot of times, that is due to waste, leaks and inefficient flushing systems that use more gallons than is necessary,” Drimmer remarked. Furthermore, most resource efficient toilets now only require a 1.6 gallon flush, so you can swap out older models for newer ones, he recommends. “A lot of times, that is due to waste, leaks and inefficient flushing systems that use more gallons than is necessary,” Drimmer says. There are also rebates and more energy saving tips at Southwest Florida Water Management’s website.
Negotiate Contract Rates.
If your board manages contract workers, check and see if your vendor can supply them at a lower rate. Otherwise, explore bids from other companies for cheaper rates. Sometimes, however, vendors lock HOA’s into multi-year contracts. Every contract—big or small—should be reviewed yearly to make sure that you’re getting what you’re supposed to be getting, and you’re paying what you’re supposed to be paying, says Jonathan Louis, CEO of AMG. “All of a sudden, you might notice that there may be extra charges,” he says.
Renegotiating contracts with vendors could lead to significant cost savings, Weil says. In South Florida, prices for trash removal have decreased significantly in the past few years, with HOAs standing to gain a 30 to 40 percent reduction in costs.
Saving money does not need to entail magical feats of accounting, but rather, a simple assessment of where costs can be reduced, and services better managed.