Accounts Payable — HOA

What are accounts payable for HOAs?

HOA accounts payable (AP) represent monies owed by a homeowner association to suppliers as short-term debts. By implication or agreement, accounts payable also represent the HOA’s obligation to such debts within a given period (typically 30-, 60, or 90-day terms, though some due-on-receipt or 180- or 360-day terms may also be included). Every bill, invoice, or regular payment is credited to accounts payable in the HOA’s general ledger (chart of accounts), balanced with a debit in business expenses in a double-entry accounting system (An accounting program should only require one entry to record both actions). Each entry is debited from the accounts payable only after it is paid.

Why are accounts payable for HOAs important?

An HOA’s accounts payable constitutes a primary bookkeeping and financial overview tool that ensures that bills (short-term debts) get paid in a timely way, avoiding several bad outcomes:

• loss of discounts and imposition of interest
• interruption of service
• loss of vendor trust
• legal action to recover funds owed
• personal embarrassment involved in poor payment practices
• community’s loss of prestige
• extra task load required to remedy such oversights

Accounts payable (AP) is also part of the mechanism for keeping up with the HOA’s liabilities, a key factor in understanding and documenting the entity’s financial soundness. Such tools are widely available in accounting software packages, including those designed specifically for HOA management.

How can you use “HOA accounts payable” in a sentence?

Accounts payable ensure timely payment of short-term debts and help track the HOA’s liabilities.