Picture this – a well maintained gated community, lush green garden, shiny apartment blocks as good as new – however, the complex is almost a decade old. What could possibly be the secret to such a well maintained housing society? The answer is not only obvious but also very simple. Smart management of society finances and a modern approach to society accounting is equivalent to a long term investment. A well maintained balance sheet reflects itself on the upkeep of a cooperative housing society. Therefore, it becomes necessary to incorporate some best practices to sustain a healthy society accounting infrastructure.
5 Best Practices Of Cooperative Housing Society Accounting
Wondering how discipline, of all things, can be counted as a best practice? Well, oftentimes, it’s the simple values that can make a lot of difference. Discipline in society finance management can lead to a streamlined system of collecting maintenance dues, wiser expenditures, increased income and financial sustainability for the society as a whole.
Cash transactions are often confusing for a cooperative housing society. It requires a lot of meticulous documentation. There is a word to describe cash transactions in a housing society – messy. Considering, the treasurer and all other management committee members are offering voluntary services to run the society smoothly, cashless transactions go a long way to make things easier.
Lets review the advantages of enforcing a disciplined cashless housing society:
- Cashless transactions can be done from anywhere at anytime. There need not be someone present in the Association office 24*7 to facilitate transactions. With the ease of internet banking and society management apps integrated with payment gateways and UPI, cashless transactions are no longer complicated.
- Cashless transactions leave an automated trail and paperless records at multiple places. With more stringent cloud security solutions coming to the forefront everyday, a cashless society accounting system is as safe as it can get.
- With cashless transactions, there can be dedicated bank account(s) for all the credit and debit transaction for the cooperative housing society. Having dedicated account(s) that records all the cash flow results in transparency in the management of the society.
- While preparing for the annual auditing, it helps to have dedicated account(s) that has the records of all the cash flow that has occurred. It is easier to go back and review all details of all transactions that has happened in a certain financial year.
Regular Follow Up, Record Keeping, Process Petty Cash Transactions
Whether using a manual accounting system or a digital accounting system, regular follow up of account books cannot be overlooked. With a manual system, it gets unwieldy to review the registers or ledgers regularly. This issue is not problematic with a software however. With a digital system, the treasurer or whoever is in charge can review the digital account books from the app at their own convenience and comfort.
If you are the Treasurer of your cooperative housing society, you must understand easy, accessible records are your new best friend. Money is one of the most complicated assets any organisation, residential or business, have to manage. (To let you in on a secret : it helps to have a wee bit OCD when it comes to keeping flawless financial records of your housing society).
Despite all the attempts to shift to a cashless society, there will always be certain transactions that cannot be cashless. We still have to enlist the services of individuals who may not have the option of resorting to a cashless financial set up. In such cases, avoiding petty cash transaction is not an option. Therefore, a good practice would be to keep regular track of this transaction. For example, the ADDA Admin module allows management committee members to enter details of petty cash in the app itself. It helps other management committee members with access to view such negotiations and keep themselves updated.
Every system always has enough room for improvement. Society accounting is no exception. Be it a manual or a digitalised system, the aim of all housing society management companies should be perfection. While perfection is usually an ideal that is often unachievable, one can always reach close to it. Shifting from a manual to a digital system definitely helps. It cuts the workload of the management committee members by a huge margin. With a more efficient system in place, a cooperative housing society can even focus on increasing income by renting out its facilities to residents frequently or even to third parties. A digital system comes in exceedingly handy regarding these bookings. With transactions and booking taking place on a single platform, it is convenient to keep track of the extra cash flow. Increased efficiency of the accounting system automatically translates to wiser expenditures.
A digital system helps to compare yearly books easily with pictorial graphs. It helps to formulate productive decisions regarding which expenses can be foregone or which sector of society management requires more funding. The objective should be to ensure value for every penny a housing society earns from residents, vendors or any other third parties.
Sustainable Accounting System Equals Sustainable Society
An efficient digital accounting system makes way for the next step of developing a self reliant cooperative housing society. With wiser expenditures and increasing income, the housing society as a whole can invest their funds in profitable ventures. One such example would be fixed deposits which can be made for shorter durations too. With excess funds in hand, the management committee can implement plans of solar power, rainwater harvesting, biogas plant and kitchen garden – all within the housing society for the benefit of the residents. A leading example in implementing such a housing society is Sustainable City, Dubai. With an environmental crisis breaking over our heads, it has become imperative for management committee members to consider sustainable living as a part of their agenda.
The best is always saved for the last. The end of the financial year and the beginning of the new one, March to June of every year sees the management committee in office going through a difficult time collating data and readying the documents for the auditor. Filing taxes is another headache management committee members have to go through. Filing TDS, GST, Professional Tax and Society Registration are some of the few annual documentation committee members must do. With an efficient, digital system in place, assets and liabilities in the balance sheet are filled up automatically based on the daily entries made by admin members. Accountants and auditors are usually third party services hired by housing societies to deal with this financial year end duty. A clean digital record helps them carry out their tasks quickly, efficiently and most importantly, effectively.
Integrating a few best practices to manage society accounting might feel like a gruelling task to do. However, with determination and patience, it has the potential to reap huge rewards. Most significantly, a strict adherence to a few best practices help to improve efficiency in leaps and bounds. And Tara Stiles explains the impact of increased efficiency,”Efficiency is a great secret that can drop us right into our ideal life path, but it is a hard one to practice and something that takes constant maintenance and work.”
Also, read about Pros and Cons of using Accounting Software for Apartment Complexes.