September 2009 Developments - 62

HOAs s many of you already know, ﬁnancial and operational aspects of HOAs are rapidly changing. The current recession has impacted budgeted revenues and related expenses, creating new challenges for the entire industry. According to a May 2009 survey from the National Association of Business Economists, however, the recession may be on its way out. Almost three-quarters of the professional forecasters surveyed expected the economic downturn to end by the third quarter of this year. While it’s reassuring to hear that there is an end in sight, many companies and organizations struggled to make it even to the third quarter of 2009. In order to keep your organization sound, think about developing a “survival program” that can carry you for as long as 12 to 18 months. Consider the following ideas from the operational and ﬁnancial sides of your business, as you develop a plan to power through the rest of 2009 and into 2010. Stuart Furman, CPA Securing Against Future Financial and Operational Challenges A in place, develop a program establishing payment plan options that will encourage delinquent owners to bring their account current. Consider extending the due date, accepting monthly payments over a period of time, or reversing late fees and interest if the account is paid in full by a certain date. Continuous contact with the delinquent owners is crucial to maximizing cash ﬂow. Also, by identifying and excluding accounts determined to be uncollectible, employees will be able to devote their time solely to collectible accounts. Additionally, as areas for reduction or elimination are identiﬁed, it is important for management to encourage staff support of organizational changes. This will help ensure that everyone’s efforts are directed towards these changes. In order to get employees to “buy in,” it is important to get them involved. Keep the lines of communication open—invite feedback and solicit ideas. Employee support is essential for the success of implementing budget and program changes. Communication should also extend to the owners and the general public. Advise current owners of changes they might notice during their next stay and provide the reasons behind these changes. Additionally, the public’s perception of the project should be considered, as it can have an effect on continued success. This can be accomplished through inexpensive sales referral programs to the owner base as well as media articles reinforcing the quality and value being offered at the project. Our industry, as well as the global economy, is struggling to pull out of a unique and lengthy recession. By creating a well-developed plan that includes ﬁnancial cuts and incentives, and then supporting that plan with good internal/ external communication, our properties will continue to offer both existing and potential owners a vacation experience they will long enjoy. Stuart Furman, CPA, is a principal at Averett Warmus Durkee, an Orlando-based accounting ﬁrm that provides accounting, taxation, and consulting services. His e-mail is stuartf@ awd-cpa.com. Operational Tips The ﬁrst order of business is to examine your current budget and identify “non-essential” expense line items— anything that won’t have a signiﬁcant impact if discontinued. These may include certain guest services and employee programs. Next, review income items (beyond maintenance fees) and evaluate how their elimination would impact the operation. For example, look at guest functions (pool parties and barbeques), miniature golf or similar amenities, and guest access to off-property facilities. Other Considerations The HOA’s management, even if staff reduction has happened, should continue to focus on maintaining a high level of employee morale and loyalty. As previously mentioned, employee support is essential for the success of implementing budget and program changes. This can be accomplished in several ways. Constant communication with all staff will serve to eliminate damaging rumors and stress regarding job security. Understanding changes—especially those impacting employees—will not only assist in implementation but will also encourage employees to support the changes and ensure a smooth transition. Also, think about offering employee programs covering topics like budgeting, stress management, and other day-to-day issues your staff and their families are dealing with outside of the workplace. Financial Tips The key to combatting the effects of the recession is to maximize cash ﬂow. A good place to start is looking at delinquent accounts. Conduct a detailed review of maintenance fee receivables to identify any delinquent accounts. If not already 62 Developments • September 2009

September 2009 Developments

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