annual budget process

We see it all the time. The annual budget process becomes the rush budget process. It goes something like this:

• Draft is prepared by the managing agent

• Distributed before a meeting

• Decision is expected at that meeting

September starts this annual season whereby the Financial Analysts at property management firms are incredibly busy.  Beyond their usual responsibilities now comes the need to accomplish a complicated and potentially detailed project.  You may see it by a change in the swiftness with which they respond to your emails and other usual requests.  Many work overtime in order to meet the needs of their property load.  While we understand the pressures on the staff this time of year, as auditors, we work for your Board. We wish to express gratitude to those financial analysts whom we work with for their hard work and ask their forgiveness if our recommendations expand their work load through the Holiday season. That being said, this project is for your Boards! Our service is to you, so here are the recommendations.

Our experience is that the ones who attach detailed calculations to back up the budgeted amounts tend to be the most accurate.  While a board may not hear during the year of their success in the budgeting process, they will see, hear and deal with shortcomings.  Potentially spinning their wheels when more imperative issues are facing the Board. We suggest you take a look at this process now and establish Board guidelines to make it better.  So, let’s look at how the process can be improved.

  1. More lead time before the meeting that the draft is presented

“Just in time” is good for operating businesses to save on costs, but for budget distribution purposes, it tends to leave people who volunteer and also have too many other things in life to deal with the risk of insufficient time in order to prepare. The default position for many is silence and acceptance.  That is not where a true leader of your community should be.  Resist any temptation to taking this path. Stand and say we need to slow the process down, as necessary.

  1. Expectation that meetings more often than monthly might need to occur this time of year

Sorry, but you would need the best financial analysts in the industry to accomplish this with the process that we seeing going on everywhere.  Slow down and discuss more, several meetings might be required.  That is OK, the goal is the correct product which benefits the board in many ways, including.  Time saved from focusing on why there is not enough money to pay bills and how to fix things later.  An A well prepared budget is an enhanced tool to utilize in monitoring the property finances all year long.

  1. Assurance that all properties professionals were used as resources

You pay them all year long, each has an aspect to offer better information and savings than the perception of someone without their expertise.  Have the insurance broker provide information on the insurance renewal, fuel oil company on the trend of pricing and whether the premium for entering into a set price contract makes sense. (The later allows for less risk of deviance from budget for heating costs.)  The auditor for Corporation taxes and annual fees.

  1. Assurance each and every board member’s question or concern was properly vetted

We tend to discuss someone else’s agenda at a Board meeting. We can lose our own perspective if we attempt to follow others thinking.  Silencing board member concerns can be costly, so let’s get conversation flowing.  If you wish endeavor on other value offering conversation, take the time to look into those contracts that seem to be renewed year to year.

Document the renewal dates and establish a list of your properties’ vendors.  Periodic consideration of each vendors performance and cost tend to improve satisfaction and minimize cost.  Industry’s shift and there maybe another vendor who does a better job for a lower cost.  You won’t know unless you evaluate, and budget time is the best time to understand and review vendor services.  There is no rush to accomplish this all now, establishing the list and rationally moving through it over time is the goal.  But let’s start now while we are looking at all this detail.

Some of us spend less time reviewing the budget than researching for our next vacation plans.  Assure that there is careful documentation of the changes and important aspects to each draft version so that everyone is on the same page.

  1. Appropriate communication is developed to inform the unit owners of the need for the increase

Unit owner expectation is going to be what they want, unless they understand the reality.  With just some simple distributing of information on important aspects of the budget, unit owner concerns are  alleviated and questions diminished.  It can be as simple as an email or two to unit owners during the process.  This also sets the stage for the unit owners to see the hard work by board members.  Yes, they elect you, but as a volunteer you work for all unit owners.  The most frequent issue unit owners have with boards is lack of sufficient communication!

If you are reading this early enough in the season, accept this as a call to action.  Evaluate the existing process and work toward improvement now, before the draft arrives just in time.  Prepare your fellow board members for an expanded process, use the guise that you want to limit any potential increase. We want you come out of this process as a budget champion, understanding more than you may have ever cared to before.  Not only have the research performed, but assure your questions are all answered and that you fully understand the reasons and needs for any monthly charge increase.


Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit or contact us at, or call (212) 397-2970 and we will be happy to help you and answer your questions.