HOA Banking: Serving Community Association Financial Needs

Homeowners associations (HOAs) are pivotal to the management and maintenance of residential communities to protect property values and provide a pleasant quality of life for their residents. This article will explore HOA banking services and features that provide more control over association finances.

Understanding HOAs

HOAs are non-profit corporations that manage and maintain residential communities, including those with condominiums, townhomes and single-family homes. The have a board of directors comprised of HOA property owners, and often hire a professional property management company to help enforce the community’s rules and regulations, collect dues and assessments, maintain common areas, perform administrative tasks, facilitate special projects and manage the association’s finances.

HOA Banking Essentials

When choosing a bank for your HOA accounts, it’s essential to look for one that provides the products and services that will best meet your needs and increase efficiency, reduce fraud and other financial risks, enhance cash flow and maximize savings opportunities. Here are some top tips to help you find the right HOA banking services:

1. Relationship Management: Choose a bank with a team of experts who are experienced in servicing HOA relationships so your association receives support to manage everyday operations with easy access to funds and efficient cash management tools, and access to capital for the occasions when your HOA needs financing for special projects like rebuilding, upgrades and repairs.
2. Compare Accounts: Deposit accounts like checking, Money Market, savings and NOW accounts offer anytime access to funds, but some may limit the number of no-fee transactions. Make sure you choose an FDIC insured account that will accommodate your transactions. If your HOA has funds that aren’t going to be needed to pay for near-term operating expenses, compare the rates on interest-earning options like Certificates of Deposit to help build savings. Also, ask your banker about Zero Balance (ZBA) accounts that automatically move idle funds in subaccounts in and out of an interest-earning master account as needed to cover expenses.
3. Incoming Payments: Look for efficient solutions to collect payments, such as rent, dues and maintenance assessments. For example, with Lockbox Services, payments can be made online by credit or debit card and eCheck, or paper checks are mailed to a dedicated P.O. Box where they are collected and processed, and funds quickly deposited into the HOA account. Merchant Services allows the association to offer payers more convenient options to pay using credit or debit cards. Zelle® for Small Business is another way associations can accept payments from individuals and other businesses. All of these services reduce risk, save time, eliminate the need for the association or property management company to manually deposit checks and provide real-time online tracking with detailed reports.
4. Outgoing Payments: Ask about online banking, mobile banking and Treasury Management services that provide the level of secure, authorized access that’s right for your HOA, like Administrator control, user entitlements, dual approvals and account security using multifactor authentication or digital tokens. Services like online bill pay, ACH, wires, Zelle® for Small Business and Payee Positive Pay can help you automate, control and track outgoing transactions to manage cash flow, save time and reduce risk, too.

Higher FDIC Insurance Limits

If your HOA has deposit balances above the $250,000 standard FDIC insurance maximum, ask the bank if it offers Insured Cash Sweep (ICS), a service that provides access to FDIC insurance coverage on deposit amounts into the millions. Here’s an overview of how ICS works:

When your bank is a member of the IntraFi Network, your banker helps you select other FDIC insured banks in the network and places your deposits in interest-earning accounts in amounts under the $250,000 FDIC insurance maximum. Your association receives the full amount of FDIC insurance on the deposits at each bank and saves the time it takes to manage multiple banking relationships because you work directly with the bank you know and trust. The HOA receives one consolidated bank statement and can access the accounts to pay bills, transfer funds and more at anytime via secure online banking sites.

Make The Right Decision for Your HOA Banking Needs

Take the time to consider the specific requirements and goals of your HOA when selecting a bank and its services. Finding a bank that specializes in HOA banking and offers comprehensive solutions tailored to your community’s needs will help ensure efficient financial management and support your association’s long-term success.

Banesco USA proudly offers all the HOA banking products and services mentioned in this article and has assembled a team of HOA banking experts to manage your relationship and help your association achieve its financial goals. Contact us today to learn more about our HOA banking services and how we can assist your association.

ICS is offered by IntraFi®. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. The depositor may exclude banks from eligibility to receive its funds. IntraFi and ICS are registered service marks, and the IntraFi Cash Service is a service mark, of IntraFi Network LLC.