Ten Budgeting Pitfalls to Avoid
1. Using "Other Income" to balance the budget.
2. Not addressing a budget surplus or deficit for the year.
3. Not addressing "Budget Variances" - why did the Association over spend or under spend?
4. Not having enough "Fat" in the budget to account for unexpected items.
5. Not accounting for "Bad Debt" and not rolling over unused bad debt every year.
6. Not keeping operating expenses consistent and level from year to year.
7. Not following the reserve contribution amount outlined in the reserve study.
8. Not evaluating the "Cash flow" of the association at year end.
9. Not looking at "Retained Earnings" at year end.
10. Not using the "Three Standard Methods" - Zero Base, Historical, or Hybrid, to calculate the budget numbers.
Budgeting is one of the most important functions to the success of the Association. The goal of any association should be to develop and adopt a realistic and accurate budget.
We are available to present in more detail on this topic and provide consulting services.