Your Association depends upon the timely receipt of your monthly assessments from the homeowners in order to meet its financial obligations. When the Board approves your community’s budget, it assumes two things: the amount of income must equal the amount of expenses, and, that each homeowner will pay his or her maintenance assessment in a timely manner. If one or the other fails to happen, it then leads to a cash flow problem, which usually results in costing everyone more money in the long run.
Your community depends entirely upon the monthly assessments to pay its bills (insurance, landscapers, water, electricity, gas, management, etc.). Every time homeowners are delinquent in paying their assessments it creates a “cash flow shortage” that may prevent the Association from paying its bills on time. There is
no other source of income available to make up for the shortage. If the Association “borrows” money from the capital reserves to pay for operating expenses, it is still required to pay it back, which in turn creates even more expenses.
Even when a few homeowners fail to pay their assessments on time it ends up costing all of the residents more money. That is because since most of your community’s expenses are predetermined, the only way to make up for a cash flow problem is to increase the amount of money coming in, or raise your monthly assessment amount. Everyone can take part in keeping their Community’s expenses down, and one of the best ways is to make sure that your monthly assessment check is sent on time!