Lifecycle of a Homeowner Charge

This guide outlines the complete lifecycle of homeowner assessment charges, from initial setup through processing, payment, and financial reporting, using an accounting software system.

I. Initial Setup

To ensure accurate processing and reporting of homeowner assessments, complete the following configuration steps in your accounting software:

1. General Ledger Configuration
   • Add GL Funds
     • Navigate to Accounting > Settings > GL Funds  & Categories > GL Funds
   • Add Cost Centers
     • Navigate to Accounting > Settings > GL Funds  & Categories > GL Cost Centers
   • Add Global Accounts
     • Navigate to Accounting > GL > Global Accounts
       • Create a Revenue GL for assessments.
       • Create an Asset GL for Accounts Receivable – Assessments.
2. Chart of Accounts & Categories
   • Create Report Categories
     • Navigate to Accounting > Settings > GL Funds & Categories
   • Set Up Chart of Accounts
     • Navigate to Accounting > GL > Chart of Accounts
       • Copy GL accounts to your association.
       • Assign each account:
         • A Fund
         • A Cost Center
         • A Report Category
3. Default and Operational Settings
   • Configure Default GL Codes
     • Navigate to Accounting > Settings > Default GL Codes
       • Assign the default GLs for:
         • Assessment Revenue GL
         • Assessment Receivables GL
   • Set Up Bank Account
     • Navigate to Accounting > Settings > Bank Account Setup
4. Charge & Group Configuration
   • Set Up Charge Codes
     • Navigate to Accounting > Settings > Charge Codes
       • Assign:
         • Revenue GL
         • Receivable GL
   • Create Budget
     • Navigate to Accounting > GL > Budgets
       • Determine the total assessment amount to bill.
   • Create Homeowner Groups
     • Navigate to Accounting > Receivable > Groups
       • Add homeowners to relevant groups.
   • Set Up Recurring Charges
     • Navigate to Accounting > Receivables > Groups
       • Configure recurring charges for each group.
   • Set Up Custom Charges (If Needed)
     • Navigate to Accounting > Receivables > Homeowner
       • Apply individual-specific charges.

II. Assessment Charge Processing

1. Issuing Charges
   • Run Recurring Charges
     • Navigate to Accounting > Receivables > Charges & Credits
   • Post Batch Charges
     • Navigate to Accounting > Receivables > Charges & Credits
   • Post Individual Charges
     • Navigate to Accounting > Receivables Charges & Credits OR Accounting > Receivables > Homeowners
2. Automated Journal Entry
   • Debit: Accounts Receivable GL
   • Credit: Assessment Revenue GL

III. Financial Reporting & Validation

1. Balance Sheet
   • Confirms that the Receivable amount matches the Delinquent Summary Aging Report.
2. Delinquent Summary Report
   • Ensures total unpaid charges equal the Accounts Receivable balance.
3. Income Statement
   • Accrual Basis: Displays total charges in the Revenue GL.
   • Cash Basis: Displays only amounts collected.

IV. Payment & Prepaid Assessment Handling

1. Receive Homeowner Payments
   • Navigate to Accounting > Receivables > Payments
2. Journal Entry for Payment
   • Debit: Bank Account GL
   • Credit: Prepaid Assessments GL
3. Run Prepaid Application
   • Automatically moves prepaid balances to cover current receivables.
4. Journal Entry for Prepaids
   • Debit: Prepaid Assessments GL
   • Credit: Accounts Receivable GL

V. Post-Payment Review & Validation

1. Updated Balance Sheet
   • Reflects reduced Accounts Receivable.
2. Updated Delinquent Summary Report
   • Excludes paid accounts; should align with the Balance Sheet.

Summary

This lifecycle ensures accurate setup, consistent billing, transparent reporting, and proper financial reconciliation of homeowner assessment charges. Following these steps ensures compliance with accounting best practices and maintains financial integrity in homeowner association management.