Monthly Financial Reporting Best Practices for HOA and Condo Boards

Homeowners' associations aren't small players anymore. Today, more than 40% of homes for sale come with HOA fees, and about one-third of U.S. housing is managed by an association. In fact, around 77 million Americans live in HOAs, with around 373,000 community associations across the country. Most homeowners pay between $200 and $400 a month, with the national average sitting around $291. Those dollars cover essentials like landscaping, security, and upkeep of shared spaces. In many communities, they also pay for pools, gyms, clubhouses, holiday decorations, and neighborhood events. Some HOAs even include utilities such as water, trash, and sewage.

When you add it all up, boards are managing lots of money across the country. So, to run an association well and manage this money effectively, board members must understand the basics of financial reporting. That helps the board see the true health of the HOA's finances, stay compliant, and make decisions that protect every homeowner's investment.

In this guide, we'll share monthly financial reporting best practices for HOA boards. We'll break down the core financial statements, give you the ideal reporting calendar, and give interpretation tips that can help you understand the HOA's financial health and make strategic decisions even if you're not an accountant.

Monthly Financial Reporting Best Practices for HOA Boards

Running a community association is a lot like running a business. Money comes in, money goes out - sometimes every day. Without a clear system, it's almost impossible to manage budgets, fund reserves, and plan for the future.

That's where financial statements come in. These reports capture revenue, expenses, assets, and liabilities. When done right, they improve transparency, which builds trust with homeowners as they can clearly see and understand where their money goes. These statements also make compliance tasks like tax filing far less stressful.

Keep in mind that financial statements must follow standard accounting procedures and principles. They're not something that HOA boards can just decide to write down on spreadsheets and notebooks without following the standard accounting structure. They also need to be accurate, consistent, and prepared on time, no matter the size or location of the association. Here are the core reports we recommend every HOA board prepare monthly.

Balance Sheet

The balance sheet is one of the fastest ways to see where your HOA stands financially at any given moment. That's why some people call it a statement of financial position. It has three core parts: assets, liabilities, and equity. Each account fits under one of these categories, and when added up, the totals must balance, where assets always equal liabilities plus equity. That balance is what gives the report its name: balance sheet. Let's walk through the sections.

Assets

Assets are everything the association owns that has monetary value. These fall into two groups: current or liquid assets and non-current or non-liquid assets. Current assets are cash and HOA properties that can be easily turned into cash. Examples include:

• Cash in bank accounts
• Petty cash funds
• Reserve funds
• Community inventory
• Unpaid assessments from homeowners
• Prepaid insurance policies

Non-current assets are harder to convert to cash. These include fixed property and long-term holdings such as:

• Community land
• Buildings and equipment
• Vehicles and maintenance tools
• Long-term investments
• Intellectual property, like trademarks and patents

Liabilities

Liabilities represent what the HOA owes to vendors, contractors, and service providers. Anything that costs your association money becomes a liability. Think of them as the costs of keeping the community running. Just like assets, liabilities are split into current and long-term liabilities. Current liabilities are amounts due within a year, such as:

• Unpaid vendor bills
• Monthly service fees
• Utility payments
• Staff wages
• Homeowner prepayments
• Short-term loans

Non-current liabilities are debts that stretch beyond a year, such as:

• Long-term loans
• Deferred revenue
• Equipment financing agreements
• Lease obligations
• Depreciation on community assets such as buildings, equipment, and vehicles.

Equity

Equity represents the value left after subtracting liabilities from assets. In simpler terms, equity is the net worth of the association. The formula is simple:

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Assets = Liabilities + Equity

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If your equity is positive, the association is in good shape. You're bringing in more than you owe. If it's negative, it's a warning sign, and the board needs to act quickly because more money is leaving the community than coming in.

Income Statement

The income statement shows the amount of money your association earned and spent during a set period. That's why some people call it a statement of income and expenses or a profit and loss statement. For boards, this usually means looking at the numbers at the end of each month. The report has three main parts: total revenue, operating expenses, and net income.

Total Revenue

Revenue is all the money coming into the association. Common revenue streams for HOAs include:

• Member dues: The primary income source for every HOA. These monthly fees from homeowners basically fund everything your association does.
• Special assessments: This is the money collected when unplanned expenses arise, like major emergency repairs and legal costs.
• Other income: This is the money collected as fees from facility rentals, fines for rule violations, interest earned on reserves, and other miscellaneous sources.

Operating Expenses

Operating expenses are the costs of keeping the community running day to day. They cover everything from office needs to physical maintenance. Typical categories include:

• Administrative Costs: Management company fees, office supplies, legal fees, accounting services, and board meeting expenses.
• Maintenance Expenses: Landscaping, pool maintenance, building repairs, equipment servicing, and other services that keep common areas in shape.
• Other Operations: Insurance premiums, security services, and utilities.

Net Income

Net income is what's left when you subtract expenses from revenue. It's what tells the board whether the community is financially moving forward or falling behind. The formula is simple:

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Net Income = Total Revenue - Total Expenses

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A positive net income means the HOA is living within its means and building stability. A negative result is a red flag that shows the association is spending more than it brings in, and corrective action is needed right away.

The income statement is often more detailed than the balance sheet, and gives boards a clear month-to-month view of financial performance, and helps answer the big question: are we operating sustainably?

Accounts Payable Aging

Every HOA relies on vendors such as landscapers, contractors, and utility providers. But invoices aren't always paid the moment the work is done. Sometimes a down payment is required up front, with the balance due later. Other times, the bill comes after the service is complete. Until those invoices are paid, they sit in accounts payable.

An AP aging report is the tool boards use to track those outstanding bills. It organizes every unpaid invoice by vendor and by how long it has been overdue. This breakdown makes it easy to spot which payments need immediate attention. A typical AP aging report includes:

• Vendor name and contact information
• Invoice number and date
• Due date
• Total amount owed
• Outstanding balance
• Days past due

Some reports also note things like credit memos, partial payments, and invoices issued but not yet settled. For the days past due, organize invoices into these timeframes:

• Current, which means not yet overdue
• 1-30 days past due
• 31-60 days past due
• 61-90 days past due
• 91+ days past due

A clear aging report helps the board:

• Avoid late fees by paying within the vendor's terms.
• Take advantage of early-payment discounts when available. In fact, most vendors offer a discount of 1-2% when you pay within 10 days. However, statistics from IOFM show that most firms only capture about 21% of these discounts, and about 12% of firms don't capture any discount due to late payments.  
• Plan ahead for upcoming cash outflows. You can see exactly when money needs to go out and plan accordingly. 
• Maintain strong relationships with vendors. Realistically, no one likes working for a board that pays late, and good vendors will stop bidding on your projects if you develop a reputation for late payments. 

Ideal Reporting Calendar

Consistency is everything when it comes to financial reporting. Every board should have a clear calendar so statements are delivered, reviewed, and acted on in a timely way. A good practice is to set a standing monthly deadline for your finance committee to receive its reports. 

For many associations, the third week of the month works best. By then, banks and investment firms will have sent updated statements, and the numbers will be reliable. Committees should receive the full package at least five days before their scheduled meeting. That way, there's time to review, ask questions, and come prepared. Here's a reporting calendar that works well:

• Monthly Financial Summary: Prepare a simple breakdown of income and expenses. Show both the current month and year-to-date figures so the board can quickly compare performance. Include the information that any board member can understand, such as total income by source, major expense categories, net income or loss, and cash position.  
• Quarterly Variance Report: Go deeper every quarter. Compare budgeted versus actual results by account and sub-account. This report highlights trends that may need attention before they grow into bigger problems. 
• Quarterly Finance Committee and Board Meeting: Bring everyone together once a quarter. These meetings serve three purposes:
  
  1. The finance committee updates the board on major financial developments from the past three months.
  2. The board gives direction on long-term financial goals and priorities.
  3. Management discusses short-term solutions for income and expense variances.

When boards follow this structure, everyone stays aligned. The finance committee, board, and management all have the same picture of where the HOA stands and where it's headed. 

Interpretation Tips for Non-Accountants

Most HOA boards are made up of community volunteers. A few might have accounting experience, but many don't. That's perfectly normal; you don't need to be a CPA to understand what the numbers are telling you. What matters is knowing how to read the big signals in each report so you can make smart decisions, and that's exactly why we have created the following interpretation tips for non-accountants.

Balance Sheet Interpretation 

We mentioned that positive equity is good news. But don't just look at the dollar amount. Look at it as a percentage of total assets, or simply the equity ratio. The formula is simple: 

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Equity Ratio = (Equity ÷ Assets) x 100

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For example, an HOA with $5,000 in equity and $8,000 in Assets has an equity ratio of 62.5%. Another HOA with the same $5,000 in equity but $100,000 in Assets only has 5%. Even if the equity is the same in dollar amount, the first HOA is financially strong; the second is not. 

A higher percentage of positive equity means stability, while a high percentage of negative equity is a serious warning sign. A higher equity ratio generally implies a lower level of debt and a more financially stable company, as it suggests the business relies more on its own funding rather than borrowed capital

Income Statement Interpretation 

Net income tells you whether more money is coming in than going out. Positive numbers mean you're operating sustainably. Repeated losses mean the opposite. However, one month's income statement tells you very little. 

Compare the statement with past periods, such as trends over 3-6 months. Trends reveal more than a single snapshot. For example, when you have a consistent positive net income, an occasional negative month isn't panic-worthy, because maybe it's a result of a major repair. However, consistent negative net income is a red flag.

Accounts Payable Aging Report Interpretation 

An AP aging report shows what you owe vendors. It's tempting to just chase the most overdue bills, but don't just pay the oldest bills first. Prioritize essential vendors like utilities, cleaning, and security. Missing those payments risks disruption of those critical services. Then weigh penalties and discounts. 

For instance, if two invoices have the same dollar amount, and one invoice charges a 1% late fee and another offers a 2% early-payment discount, paying the latter first saves more. I also suggest you prioritize long-term vendors over one-off contract vendors. Good long-term service providers are hard to find and worth keeping happy. This kind of strategic thinking helps you stretch dollars and avoid disruption of critical services.

Automating the Process

Here's the good news: you don't need to wrestle with all this manually, waste board time, and create errors. Platforms like LeapAP are designed for HOAs and condos to handle the heavy lifting. The system captures invoices directly from vendor and utility portals, routes them for approval, and processes payments by check, ACH, EFT, or virtual card. 

Everything syncs with your accounting software, so reconciliation happens automatically. That means your role as board members is reviewing reports and making decisions, not shuffling paperwork. The software handles the workflows, and you handle the strategy.

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