High-Rise Association Financial Statements: 5 Questions to Ask to Avoid Wasteful Spending
Managing high-rise association financial statements can be challenging. Fluctuations in budget categories and oversight of staff can lead to cost management issues. Additionally, reviewing financial statements that lack detailed information or are delayed can hinder effective expense management. To avoid these problems, consider asking yourself these five important questions before your next financial review. And don't hesitate to seek assistance from experts in the field.
1. Are you able to make informed decisions based on your high-rise association's financial statement? Or is your association wasting hard-earned dollars on unnecessary costs?
The reality is most high-rise association financial statements group expenses in broad categories, such as Plumbing, Maintenance, etc. Without clear details under the expense category, it becomes challenging to distinguish between preventive maintenance costs that contribute to the long-term success of the community and maintenance costs that are a response to ongoing issues. However, with proper visibility and management, these reactive issues can be contained and minimized, resulting in cost savings for the association. By partnering with a reliable high-rise association management provider, you can benefit from a thorough financial review process that ensures your budget is on track.
2. Is your investment in staff maximizing the potential of your building and providing optimal levels of efficiency and resident satisfaction?
Staffing costs can be a significant expenditure for any building, and it is crucial to ensure that these expenses are allocated effectively to enhance the resident experience. Oftentimes, we find that staff salaries are being allocated to areas that do not have a meaningful impact on the overall management of the community. Having an excess of staff in one area can be wasteful and detract from other essential aspects of building management. To address this issue, a fresh assessment conducted by a highly experienced high-rise management company can provide valuable insights for optimizing your spending on staff.
In some cases, we identify situations where important roles, such as General Manager, suffer from the hiring of unsuitable candidates. These candidates may either be underqualified and prone to burning out quickly, or overqualified and feeling stagnant with no room for growth. This results in a decrease in performance when it comes to day-to-day association management duties. It's a common misconception that in order to hire the best manager for your building, you need to offer the highest salary. This isn't always true. By conducting a salary analysis and leveraging the knowledge of your high-rise association management company regarding the local job market, you can effectively identify the right candidate for the position.
3. When was your last utility expense review? If so, did you discover any discrepancies?
Periodic review of utilities can uncover wasteful spending in your high-rise association financial statements. For example, we’ve seen waste management companies continue to charge fees for services when the association fails to make appropriate adjustments to their waste management system. Despite being aware of this situation, the utility company continues to bill the association until instructed otherwise. Consequently, the burden falls on the board to meticulously analyze financials and identify these charges, enabling them to implement corrective measures.
Another clear example of wasteful spending is water usage in high-rise buildings. Oftentimes, these buildings are billed for water through a single meter that covers all the association's needs, such as pools, fountains, and irrigation. This can make it challenging to pinpoint where the water expenses are coming from or to identify a water leak if there is a sudden increase in usage compared to the previous month. With only one meter, it becomes impossible to determine the source of these issues. It is crucial to have a high-rise association partner who can provide detailed financial statements that allow the board to identify these problems and take appropriate corrective action. This level of visibility is essential for making informed decisions about your budget.
4. Would benchmarking your costs reveal your expense categories to be in line with the broader market, or out of whack?
Gain valuable insights and lower costs by harnessing the extensive client base of a leading management company, which has a wide network of high-rise buildings across the state and country. This allows the board to compare costs with similar structures, enabling them to pinpoint areas that require further scrutiny and ensure optimal financial management.
FirstService Residential analyzes common expense categories such as staffing, insurance, utilities, heating and cooling, landscaping, and pool maintenance in comparison to other high-rise buildings in the market. The goal is to provide an assessment of whether your costs are aligned or require further review and adjustments. By comparing assessments on a square foot per month basis, it can be determined whether or not you are competitive within the marketplace. It's crucial to consider the potential impact on property values if potential buyers perceive your assessments as excessive or wasteful, which may lead them to consider purchasing in another building.
5. When was your last detailed budget review?
If it’s been a while since your last budget review, getting a fresh perspective can help. FirstService Residential offers a no-obligation assessment of your high-rise’s day-to-day operations and monthly association financial statements which can be an excellent tool to help you identify areas of wasteful spending. Our team of experts conducts regular, in-depth financial reviews and offers insights into where your hard-earned association dollars are going.
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In conclusion, navigating the complexities of managing high-rise association financial statements requires careful consideration and attention to detail. By asking yourself the five important questions outlined in this article before your next financial review, you can proactively address potential cost management issues and ensure effective expense management. Furthermore, don't hesitate to seek assistance from experts in the field who can provide valuable insights and guidance. With a proactive approach and expert support, you can effectively manage your high-rise association's financial statements and achieve financial stability. Contact us for a no obligation consultation and discover where your association can cut unnecessary costs and save!