Since a housing society is a self-sustained, self-governing entity that requires participation from all the residents, its financial efficacy and soundness are top of the priority list for the management committee.
From the standpoint of legal compliance, a State Auditor audits the society’s financial accounts once every year, taking stock of statements, ledgers, cashbooks, profit-loss balance sheets, expense reports, loans, investment, borrowings, lending of the funds by the society and the interest paid and received along with the related agreements with outside agencies. Not only that, come Annual General Body Meeting, the society has to produce a detailed analysis and account of all the financial reports pertaining to the year so that the residents are privy to the health and the legitimacy of the society’s financial affairs and undertakings.
If the Secretary, Treasurer, or Accounts Manager of the society is found mismanaging the funds or happens to be slacking in keeping accurate records of income and expenses, being negligent of discrepancies, there could be serious damages in the form of penalty and/or removal from the managing committee.
At the same time, the MC is responsible for timely collection of all dues from the members, pay service staff and vendors, paying utility bills, managing the sinking fund/repair and maintenance fund, society’s bank account transactions, and filing yearly income tax returns as per government mandate.
Listed below are the main income sources and expenses of a housing society:
Society Income Sources
1. Internal Income Source
- Maintenance charges
- Non-occupancy charges
- Parking fees
- Property transfer fees
- Membership deposit
- Interest generated by dividends, fixed deposits, and investment
- Interest earned from defaulting members
2. External Income Source
- Advertisement/billboards on society premises
- Mobile tower rentals
- Store rentals – Medical, Grocery, Boutique, stationery stores, etc
- Income from renting open spaces/common spaces to vendors
Society Expenses
- Maintenance staff/office manager salaries
- Repair, maintenance, and reconstruction of premises, equipment, assets, amenities
- Lift maintenance
- Common light and water bills
- Annual maintenance charges for lift, pool, and other electronic equipment
- Hired labor for maintenance and cleanliness of common areas, society streets
- Plumber, electrician charges
- Property tax payment and insurance payment
- Spends on cultural, religious and celebration activities
- Installation of the waste treatment plant, solar system, rainwater harvesting, smart meters, etc
Why digital management of revenue and income is important
A substantial number of medium to large residential societies in tier I and II cities in India have moved from pen-and-paper ledgers and invoicing to digital account management.
Going paper-free with your accounting is not only environment-friendly but highly practical with the availability of modern-day society accounting software that helps you stay organized effortlessly.
Sure, a WhatsApp group chat is enough for day to day communication and swapping stories but when it comes to a serious numbers game, a professional accounting tool is a must. Below are the reasons why:
1. Search, don’t dig
Who has the time to find an invoice or a receipt from a crowded and messy filing cabinet? With a simple bulk upload and search option on an accounting dashboard, one can easily locate past and present transactions without wasting time.
2. Eliminate manual errors
With multiple automation features, you can schedule your invoices without manual inputs while auto-calculating the amount to be charged per resident including fine-tuning discounts, predetermined rates, arrears, settlement from advance payments, etc. These helpful features keep your accounting clean for government audits and member reviews.
3. Manage multiple complex accounting activities with transparency
No matter how big the task, you can find ease with generating reports like BS, P&L, GST Report, TDS, etc., along with individual resident collection reports, graphical income/expense reports, daily electronic cashbook, automatic payment reconciliation, balance sheet, security deposit reports, dues and defaulters reports, cash or bank transfer, and general ledgers.
4. Make dues payment easy and comfortable for society members
Create auto-billing options for members with timely reminders to pay maintenance fees and other dues. You can also create group invoices with multiple line items in a single invoice or choose targeted invoicing for different buildings and wings. Additionally, you can avail settings for charging defaulters with fines through rates that can be constant or set as a percentage of overdue as well as generate credit reports for charges on issued invoices.
Digital account management can also integrate online payments from residents and allows MC members to track overdue payments. This is especially useful when you’re dealing with hundreds of incoming monthly payments in a residential society with multiple wings and high-rise buildings.
Once an online or advance payment is made by the members, digital accounting features can auto-generate receipts and auto-reconcile payments as well.
In summation
Essentially, the toughest and the most tedious job of income and expenditure management can be a smooth sailing task for the stakeholders in a housing society with prudent and smart use of technology.
Years and piles of paperwork can be easily uploaded or downloaded digitally, immaculate reports can be generated by one click, and constant back and forth for dues collection can be transitioned to an app-based framework. Access to billing and accounting can be granted to the inner sanctum of the MC so that financial security is never compromised as opposed to physical account keeping which is vulnerable to tampering.
If your housing society has been considering going digital in terms of financial management, now is the time to explore new and efficient options. The benefits will be manifold and the convenience invaluable.
Read:
Election Procedure for Housing Societies
Apartment Car Parking Rules in Housing Society
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Cooperative Housing Society