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HOA Accounts Payable Report: What Is This For?

hoa accounts payable report

The HOA accounts payable report is an important tool for measuring an association’s debts. Unfortunately, not all board members fully understand how it works.


What Is an HOA Accounts Payable Report?

As with other organizations, a homeowners association operates with the help of a financial system. Homeowners pay monthly dues, which the association then uses to fund various expenses required to maintain the community. Not all of these expenses, though, are immediately paid when they are incurred. More often than not, vendors will perform the work and send a bill later on. Some require downpayments first, with the rest being due upon completion of the work.

These are accounts payable.

Any debts the association has to other parties are considered accounts payable. If your HOA owes money for landscaping services, your accounts payable increases. The same goes for when you owe money for construction work, maintenance and repairs, supplies, and the like.

An accounts payable report is a financial report that details your association’s debts. Basically, it contains all of your accounts payable or AP for the period.


What Is Included in a Homeowners Association Accounts Payable Report?

It is easy to get lost in a sea of financial data if you have no prior accounting experience. This is particularly true for the more complicated statements such as balance sheets and general ledgers. But, the accounts payable report is rather simple — certainly far easier to understand than a balance sheet.

The components of an HOA accounts payable report are as follows:

  • Vendor names
  • The amount your association owes to each vendor
  • How long you have owed the debts to each vendor
  • Whether any payments are past due

For the duration of the debts, you will typically encounter five columns separated by 30 days. The first column contains current debts, those that are under 30 days old. The second column is for debts that are 1 to 30 days past due, the third column for 31 to 60 days, the fourth column for 61 to 90 days, and the final column for debts that are over 90 days past due. Because debts age, the accounts payable report frequently changes, with debts moving from one column to another when they hit a certain point.


The Importance of an HOA Accounts Payable Report

Some HOA board members might wonder why preparing and maintaining an accounts payable report is even necessary. While it might not be for associations that use the cash basis of accounting, associations that use the accrual or modified accrual methods will greatly benefit from the report.

For one thing, an HOA accounts payable report will help you manage your debts. You can track how much you owe, how long you have owed them, and to whom you owe them. The report is organized in such a manner that you can visualize your debts at a glance.

Tracking your debts can help your associations in two ways:


1. Save Money

Firstly, it will reduce the occurrence of interest. When you pay your debts on time, it eliminates vendors charging you interest or late fees. This will save your association a lot of money in the long run. With this report, you can settle your debts when they become past due or pay those that have been past due for longer.


2. Maintain a Good Reputation

Secondly, tracking your debts will allow you to manage them better and maintain your reputation as a good payer. Nobody likes doing business with bad payers. And word can spread around relatively fast among vendors — even faster when you live in a small town. To maintain a good working relationship with vendors, you need to pay your debts on time. Again, the HOA accounts payable report can help you with this.


Accounts Payable Report vs Accounts Receivable Report

If you know anything about accounting, then you know the difference between accounts payable and accounts receivable. Accounts payable is what your association owes, while accounts receivable is what other parties owe to your association.

The accounts receivable report is basically the complete opposite of an accounts payable report. An AR report lists down all of the names of your debtors, how much they owe you, and how long they have been due. It provides you with a way to easily track your receivables.

Sometimes, associations will have a separate delinquency report from the AR report. The delinquency report consists of all the delinquent accounts in your association. It contains the names of the owners who are delinquent, how much they owe, and how long the amounts have been due.


The Role of Management Software

homeowners association accounts payable reportUnfortunately, not all HOA board members have a background in accounting. This makes it difficult to prepare financial reports, including the accounts payable report. While many turn to HOA management companies or accountants for help, another alternative is to invest in software.

With management software, you can seamlessly generate an AP report with the click of a button. All you have to do is enter your payables and tag them to the appropriate vendor. The software will do the rest, including aging. This way, you can generate a report in real-time.

Apart from preparing an accounts payable report, HOA management software can also help your board with a multitude of other tasks. This includes invoice processing, delinquency tracking, dues collection, bank reconciliation, and financial statement generation. The capabilities of software also extend to other aspects of managing an association such as homeowner communication, task scheduling, work order processing, and violations tracking.


Helping HOA Board Members Everywhere

The HOA accounts payable report is just one of the many financial reports HOA boards must prepare. Between accounting and other management tasks, board members often find themselves feeling overwhelmed with their duties. Self-managed communities will benefit from investing in HOA management software that comes equipped with full accounting capabilities.

This is where Condo Manager comes in. We offer comprehensive programs designed for self-managed communities as well as HOA management companies with many clients. If you want to know more about our product, call us today at (800) 626-1267 or contact us online to schedule a free demo.