Budget season is here, and internal preparations should be on their way. While many believe the task is daunting and overwhelming, it shouldn't be. As I've mentioned throughout the year, if you've taken steps to review your financials monthly and quarterly, you should know exactly where you are and what steps you need to take next year. If you haven't done so below, I'll provide some tips so you can put the information together this year to make next year's budget process simpler. 

1. Contract Log Sheet - Every association should be keeping track of all of its contracts. The points you want to track are expiration date, auto-renews terms, cancellation terms, annual increases, services rendered, etc. Having this information at hand makes not just your budgeting process simple but your overall understanding of your agreements. 

2. Project List - Most associations are frustrated because they don't feel that enough gets done. Many times, this occurs because they aren't keeping track of their projects. There should be a compiled list of current, future, and completed projects with a dollar amount tied to each. Having this in hand, you can understand what funds you need to project for the following year. 

3. Reserve Study - We strongly recommend having a reserve study done for your community. The cost is minimal compared to the value the board will receive. It is also a great tool to educate your residents on what they can potentially expect to spend and special assess should they not have the proper reserves. 

This budget year does come with unexpected increases in cost. First is the impact COVID has or will have on your association. For those associations that have opened common areas, there is an increase in labor and supplies expenditure. Further, you must prepare to factor in the loss of potential revenue for next year (owners not paying dues.) If you don't have a bad debit line item, this is the time to consider adding one. Second is the increased cost of property insurance. You must contact your agent to know if you can expect any increases. We've seen a significant increase over the past few months on insurance renewals.

If there was ever a time to do your budget early, this is the time, especially those that plan to waive the reserves. Having to obtain the necessary votes via a meeting or proxy may be challenging with COVID. Further, it would be best if you kept in mind that we may have some backups at the post office with all that is going on with the elections. However, you have the option of taking those votes online, but you can't wait too long to hire a company since you'll need time to prepare. 

Remember, the budget is the association's backbone, so do yourself and your fellow residents a favor by presenting a real budget. If you don't, you will always end up paying for that mistake; however, this time, it will probably be with interest.