Before You Pay That Invoice: A Payment Checklist for Volunteer HOA Treasurers

Picture a normal Tuesday. The treasurer, who has a day job and a family, opens an email from the landscaper the association has used for years. The invoice looks right. At the bottom is a friendly note: "We've switched banks, please send this month's payment to the new account below." Nothing feels off.

That is exactly how a lot of payment fraud works, and the same lack of friction lets honest mistakes through too: paying twice, paying for unfinished work, paying a neighbor's company nobody checked. Preventing it doesn't take an accountant, just a short routine every invoice goes through. Here is one a board can adopt in a single meeting.

Start with the contract, then the work. An invoice is a request for money, not proof you owe it. Compare it to the signed contract or work order: scope, price, dates. Charges that appear nowhere in the paperwork should be explained in writing before anyone pays. Then make sure the work was actually done, confirmed by someone other than the person who hired the vendor. A quick walk-through or a photo is enough for most jobs. The FTC's small-business guidance says to set clear procedures for who approves purchases and invoices and to check every invoice closely, and it warns about bills for things nobody ordered, sent in the hope that whoever pays the bills assumes they're legitimate.

Next, set approval levels and never self-approve. Decide in advance who can approve what. Routine bills under a set amount, against an existing contract, might be the treasurer's to pay. Anything above that amount goes to the board and is recorded in the minutes. Any new vendor or ongoing service needs a signed contract and a board vote first. The dollar amounts are the board's call; what matters is that they are written down.

Then add two rules. First, the person who approves an invoice should not be the person who cuts the check or sends the transfer. Second, nobody approves an invoice for their own company, a relative's company, or their own reimbursement. Association-industry guidance commonly recommends dual signatures. For self-managed communities, the Community Associations Institute suggests that a board member with no bank or card access compare invoices against paid checks and receipts, and that bank statements also go to a board member who cannot sign checks or move money. It also says never to sign a blank check.

Collect paperwork before the first payment, and make it a condition of getting paid. The first item is a completed Form W-9. The IRS describes it as how a person gives their correct taxpayer identification number to whoever must report payments to the IRS. If a payee doesn't provide a taxpayer ID, the payer may be required to withhold a flat 24% of the payment under the IRS's backup withholding rules. Whether you owe a vendor a 1099 depends on the type of business and the payment year (payments to corporations are generally exempt, with exceptions such as legal fees), so ask your CPA. A W-9 contains a tax ID, so store it securely and don't pass it around by email. The second item is a certificate of insurance showing the insurer, policy number and dates, who is insured, and the liability limits. Many practitioners also recommend asking to be named an additional insured and requesting updated proof every year from regular vendors. Whether you must collect it depends on your state and your documents, but it is cheap protection.

Verify bank changes with a phone call you place yourself. The FBI's Internet Crime Complaint Center describes business email compromise as criminals taking over or imitating real email accounts to redirect legitimate payments. Its advice for changed payment instructions is to confirm them through a separate channel, such as a phone number you already know, rather than replying to the email, and to check sender addresses and links for misspelled domains. Turn that into a rule: any change to a vendor's bank account or payment method is confirmed by phone, using a number from the signed contract or your own records and never the one in the new message, and whoever calls writes down the date and who they spoke with. Be suspicious of anyone who demands payment by wire transfer, cryptocurrency or gift cards; the FTC says not to pay in those cases. If money has already gone to the wrong account, the FBI says to contact your bank immediately to request a recall and to file a complaint at ic3.gov.

Check for duplicates and odd vendors. Before paying, search your records for the same vendor, invoice number and amount, and mark each invoice paid with the date and check or transfer number so it can't be paid again. Association fraud-prevention articles list a few warning signs worth a second look: photocopies in place of original invoices, a vendor address that is inside the community or only a P.O. box, repeated payments to a vendor meant to be used once, and services paid for with no evidence they were delivered.

Disclose conflicts and related parties. Volunteers live next door to the people they hire, and that is fine if it's out in the open. Ask every bidder about ties to a board member. A director with a stake in a vendor discloses it, the disclosure goes in the minutes, and that director stays out of the discussion and the vote. Some states set formal rules; Florida's homeowners' association statute, for example, requires advance disclosure and a supermajority board vote on contracts with a director's business. Other states differ, so check your state's law and your bylaws.

Keep the paper trail. Each payment should leave one folder, paper or digital, holding the contract or work order, the original invoice, the approval, proof of delivery, the W-9 and insurance certificate, and the payment record. When an owner, an insurer or the next board asks why you paid something, the answer is in the folder. Then put the whole routine in a one-page written policy, adopt it at a board meeting and record the vote. State the approval thresholds, who may not approve what, which documents a vendor must provide, the call-back rule for bank changes, and where records live. Have the association's attorney or CPA review it once, since rules vary by state and by governing documents.

The checklist, for the top of the folder: the invoice matches the signed contract, scope and price; someone independent confirmed the work was delivered; the amount falls within the right approval level and the approval is recorded; the approver is not the payer and not the vendor or its relative; a W-9 and certificate of insurance are on file; any bank or payment change was confirmed by calling a known number; there is no duplicate and the invoice is marked paid; conflicts are disclosed and recorded; and the full paper trail is filed.

This is general information, not legal or tax advice. Free tools for self-managed boards, like the ones FreeHOA is building, are meant to make routines like this easier to stick with.