SSKB Strata Series: Finance in Strata Webinar

October 29, 2026, 5:30PM

1h 16m 30s

Peter Todd   0:02
Good evening, everybody. Welcome to the next instalment in our SSKB Strata series, where we are focusing in the incredibly important topic of finance in our Strata schemes, being able to read our financial statements and having a good understanding of where does the money go that we pay in levies and what are some things that bodies corporate and committees in particular, along with owners, have to keep in mind? We’ve had over 100 people register for tonight’s session, so it’s obviously one that people have significant interest in. And if you are online with us tonight, very much thank you for your engagement in this topic. So a couple of things before I introduce our panel tonight.

Firstly, my name is Peter Todd. I’m in charge of people and culture here at SSKB and an element of that role is leading the education of our staff and also leading the education of our customers. Hence tonight.

I’m also a senior Body Corporate manager and have a number of schemes that I look after myself and obviously do work with them on their financials. And I am also an owner in bodies corporate and have actually been the treasurer of a Body Corporate I lived in for five years. So that’s a little bit of my background. I’ll introduce the rest of our panellists in a moment, but just before we get to that, just letting everybody know that this session will be recorded and a replay link will be shared with all attendees after the fact. You can submit questions via the Q&A box that is on screen and I’ll show people how to do that in a moment. Something that I wanted to speak on my behalf and also everybody on the panel, tonight is very much about a general understanding of the financial nature of bodies corporate and what you need to know.

We are not talking tonight about specific schemes. We are giving people hopefully a bit of an understanding of how to read financials, understand where the money goes, things that bodies corporate need to consider. This is not specific advice for any individual scheme.

And everybody, if I can speak a little bit from the heart, having done a number of these webinars, I know I’ve had people e-mail me after the fact, which is absolutely fine. I love the engagement of that, and you’re welcome to do that. But probably in doing so, I’ve said, you know, in minute 21 of that webinar you did, you said X, and here’s my scheme, you know, should we sack the Committee? This is not that sort of forum. It’s not that sort of advice. Our education tonight is about helping people better understand Body Corporate finances rather than any specific buildings. If you’ve got those sort of questions, let’s connect offline separately.

If you do want to ask general questions that you think might be helpful to yourself or other people online with us tonight or via recording, there’s a couple of different options for you there. If you are on your mobile phone, you can see the iPhone graphic there and at the top of a drop-down is a Q&A section for you to click on and type in your question. If you are at home on a PC or a laptop, if you go to the top of the screen, there will be a question area that you can click on and ask your questions.

We have a number of pre-registered questions. Which we’ll get to at the end, but also, as we go along, we’ll attempt to answer any questions that people have for us tonight. Let’s get to our panel, absolutely chuffed to have an incredible amount of experience with us tonight to speak about Body Corporate finances. So, firstly, our Chief Strata Officer, Jess Beckett. Jess has been working with SSKB for 13 years, is in charge of all of our Strata teams across the whole company, is very much a person of escalation when there are issues in schemes that need that extra bit of support, or feedback, or advice and certainly is somebody that has a great practical knowledge of applying Body Corporate finances and scheme management. Jess, welcome to our panel.

Jessica Beckett   4:47
Thank you, Peter. Happy to be here.

Peter Todd   4:49
And Jenny Purcell. Jenny is our Senior Finance Manager at SSKB.
oversees our team here of client financial accountants and also our accounts payable section on behalf of our bodies corporate. Jenny has worked across a number of companies and has over 20 years of specialist knowledge in the Body Corporate financials area. Jenny, thank you for being with us tonight.

Jenny Purcell   5:17
Thank you. Thank you for having me.

Peter Todd   5:19
Righty-o everybody, let’s get underway. Firstly, the topic of what is Strata Finance. Jess and Jenny, I know that when I look at this topic, it’s something that’s absolutely central to good governance in a Body Corporate, to have an understanding of the financials and to carry some level of financial responsibility. Effectively, what is underpinning everything is a Committee duty to maintain the common property to a good standard, and that is to maintain the common property today and to maintain the common property into the future as well. So we’re talking here about the difference between administrative fund and sinking fund, which we’re going to get to in a moment.

A Body Corporate is like a not-for-profit company or organisation effectively and they have their income, which is through the levies, and then they have expenses which go out at the end, and you hope that those things balance out with some money in the bank for the sinking fund. Jess, why does financial management in a Body Corporate matter?

Jessica Beckett   6:38
That’s a really great question, Peter. And, you know, speaking from my experience as a Strata manager, I find issues of finance can cause a lot of angst within schemes, particularly from lot owners. So you’ve often got Committee members, building managers, Strata managers working really closely together. So they know what’s going on day-to-day. They know what they’re talking about and planning for the future. But it’s often the lot owners, they may not pay attention to meeting minutes or really be aware of what’s going on in the building. And it’s not until they get their levy notice. And, you know, sometimes there might be increases or changes with this. And that’s when they start asking questions. So financial management is really important. And for me, and some of the things I’ll be speaking to tonight is also how clear communication to lot owners plays a really important part in that as well.

Peter Todd   7:24
Yeah, thank you, Jess. I know everybody you may know at SSKB, we have a client solutions team and our client solutions team take general phone calls from owners, potentially people who aren’t on the Committee and they are ringing through to our central line. And one of the most common areas of people ringing up will be that the levies have gone up and they haven’t necessarily engaged any previous Committee budget meetings or annual meetings. They’ve got their levy notice and they’re unhappy about the rises. And obviously tonight we’ll touch on that because there’ll always be reasons for those rises. Jenny, sorry, Jess, I’ll bring you in. Sorry, I’ll keep you going on a few questions here. Do all the monies that are paid in levies, do they go to the SSKB Christmas party?

Jessica Beckett   8:17
Wouldn’t that be nice? And yes, I mean, it is a common misconception as well and something we find people don’t necessarily understand. Where are their Body Corporate contributions or levies? Where are those going and what are they funding? So when we’re talking about, well, what are your levies actually fund? As many people on the Webinar tonight might know, we’ve obviously got your administrative fund and sinking fund and we’ll get into that. But generally speaking, your contributions are, you know, funding the Body Corporate for their current operating cost, repairs and maintenance of the scheme, insurance, utilities, those types of things. And then also, we’re planning for the future. So we’re putting money in the sinking fund, and we’re planning for long-term capital works and upgrades that are needed.

Peter Todd   8:58
Yeah, thanks, Jess. And I know that is genuinely a misconception, and it can be an owner’s language use, and I know that’s very natural.
But when you’re speaking to people as a strata manager, they’ll say things like, the levies that we pay you at SSKB, and of course, the levies that people are paying are collectively going into the pot for everything that is required in a Body Corporate, and SSKB is really generally about two or three percent of that overall cost. So the monies sadly don’t go to the SSKB Christmas party. Jess an interesting thing for people to know, all bodies corporate have a bank account, and they have one bank account, and there is one amount of money that is in that bank account. But then separately, from an accounting perspective, that’s broken up into sections. And for that, and I will bring Jenny in shortly to explain that, but there’s those two funds. There’s the administrative fund and the sinking fund. And those two things, there’s a legislative requirements out there, Jess, that you just can’t overspend in one and spend from the other.

Peter Todd   10:14
That’s right, Peter. And again, probably a common misconception that there’s therefore 2 bank accounts. So as you said, we have one working bank account that all of the funds go into. And then when we’re referring to your financial statements, you’ll then see the funds split between your administrative fund and your sinking fund. And I touched on it a little bit before, but just to provide a little bit more clarity around that, expenses that are going to your administrative fund. So again, these are set up within the Queensland legislation, but it’s typically things like any contractual fees. So we’re talking things here like building management or caretaking fees, Strata management fees. There might also be things like fire maintenance contracts, lift maintenance contracts. We’re looking at things like repairs and maintenance, and then we’re looking at some of the other costs associated, such as insurance, as other things going into the administrative fund. Now, when we’re looking at your sinking fund, typically, your sinking fund, and again, we’ll go into this in more detail, is going to be governed by what we call your sinking fund forecast. However, the items you’ll see in your sinking fund are going to be your capital expenses predominantly. And we’re putting funds in here for major repairs and replacement items. So think about things like lift upgrades, external building painting, replacement of carpet within common property areas. Those types of things are going to be expenses allocated to the sinking fund.

Peter Todd   11:39
Yeah, and Jenny, you’ve got a really, really simple metaphor that you could use, that I know you have used with staff.

That sort of explains the difference between what might get spent from an administration fund or administrative fund and what might get sent in the sinking fund. What’s that really simple example?

Jenny Purcell   11:57
So a really simple example is that, so the administration fund, it might pay for your light bulbs when they need replacing that are in the common area, and but like the light fitting, when it actually needs replacing would go into the sinking fund.

Peter Todd   12:15
Absolutely, absolutely. Jess, talk us through, you know, this is something that you’re doing in your day-to-day life. The Body Corporate has reached its financial year end and we’re looking forward now to levies being decided for the future. So we’re looking at budgets for the future. Talk us through that process for our customers. How does that work?

Jessica Beckett   12:43
Thanks, Peter. So as you said, we’re waiting till we get up until the Body Corporate end of financial year. And at this time, our client financials team led by Jenny, they’re preparing the year end financials. So they’re going through, they’re checking things like coding, they’re looking at accruals, making sure expenses have all come in. And once they’re fairly certain that those financial statements are completed, they’ll notify the Strata Manager. Now speaking to SSKB’s processes, what then typically will occur is that your SSKB Strata Manager would prepare the first cut of the draft budget.
And they’ll then heavily consult on that draft budget with the Committee, and then also occasionally the building manager if you have one. Now, when we’re looking at creating a draft budget, typically what we’re looking at is things such as what did we spend last year and what was budgeted, so checking for variances there. We’re looking at things like has the insurance premium been paid and what was that?

And if the premium hasn’t been paid, we might be engaging with your broker to get an idea of any increase or decrease. And we’re also looking at contractual fees. So often, as we all know, contracts usually have an annual escalation. So we’re looking at what this is and factoring that into the budget. Now, when we’re looking at the sinking fund, we’re looking at the sinking fund forecast.

This is going to give us a guide on what level the contribution should be set at, and it’s also going to outline to us what the proposed expenditure for that year could be.

Now, that being said, it’s certainly not SSKB’s draft budget. It’s very much the Committee’s draft budget. So as I said, we’ll consult heavily with the Committee in relation to what we’ve done in preparation with this. They’ll then often make, you know, sometimes minimal changes to sometimes a lot of changes. We’ll then have a budget meeting. And at this time, that’s when the Committee is approving the budget to basically say, this is the final draft budget. We’re now ready to present this to lot owners. And that’s when we will then prepare the AGM agenda. and we’ll send that out to lot owners with at least 21 days notice, and they’ll then vote on that budget at that AGM, and that will then determine the contributions for the next financial year.

Peter Todd   14:49
Yeah, thanks, Jess. So to general owners, the minutes of the budget Committee meeting are going to be really critical in people getting some level of prediction of what next year’s levies are going to be and then they’re voting for those on the AGM, so definitely to engage the AGM. Just speaking very off script, Jess, I’ve not known any committees that want to willy-nilly raise levies without really, really good reason. Most in my experience, and I know your experience is incredible, you know, reluctant to raise levies unless they absolutely have to.

Jessica Beckett   15:24
Well, that’s right, because I mean, as we all know, Committee members are also contributing, so any increase is also going to impact them as well. But that being said, Peter, I will make the point that, you know, in my role as a Strata manager, I often caution committees to, you know, when they’re considering increases, and something we always sort of recommend to people is to try and keep the levies stable or have minimal increases each year, rather than looking at decreasing the levies. Because we’ve found in the past, owners get used to levies going down, and then as soon as you increase them again, that can you know, cause a bit of angst and a bit of confusion about what’s going on.

Peter Todd   16:00
Absolutely, stability is the best possible outcome. Okay, so the budget gets done and we work out how much everybody has to pay per contribution lot entitlement. And that then drives how much people have to pay in total for their individual lots, levies. Jess, what is this mystery thing, contribution lot entitlement?

Jessica Beckett   16:28
So the contribution lot entitlements are essentially the basis for how the contributions are being determined. You can find a schedule of the lot entitlements in your community management statement and they’re typically set by the developer. But a really common analogy I’ve often heard is that usually the person who owns the penthouse apartment is going to be contributing more to the maintenance and upkeep of the scheme compared to the person with the studio ground level apartment. So that’s just a very general way of looking at it. But typically, no, not all owners pay the same amount of levies.

Peter Todd   17:02
Yeah, that’s right. So the contribution lot entitlement is effectively like your proportion of what you need to pay towards the common property. It’s generally going to be based on things like the size of your unit, the size of the common property, things like that.

Well, we can have the instance where, you know, there’s higher levies which have come up, fees can rise, we can have owners paying different amounts of levies. Let’s go to the thing that that sort of bill shop concept, where the levies have gone up and people are ringing client solutions. Just on that, Jess, what are the self-help things people can do? I know we might have already covered some of those in our answers, but if you’re wanting to sort of first examine, crikey, it looks like my levies have really gone up this year, what might I do self-help wise to try and find the answer to that before I ring Client Solutions at SSKB?

Jessica Beckett   18:11
Absolutely have a look at the minutes of meetings. So often any minutes of meetings are going to be referring to expenditure and projects and things like that. But your budget Committee meeting minutes and your AGM agenda are hopefully going to be the place where you’ve got some more detailed notes around those increases and what’s being considered there. So that would be the 1st place I’d look. Obviously looking at the financial statements as well, that can give people an indication of where there are variances and where there’s had to be new expenses or expenses that have significantly increased.

Peter Todd   18:45
Yeah, that’s right. And, you know, obviously just applying a whole bunch of common sense here to people. Buildings age and we do our absolute best in organising sinking funds forecast for them to predict maintenance work that needs to occur. But buildings have their own creaks and so on like people do, and not all of those things are completely predictable, so maintenance costs and needs can apply, and particularly as buildings age. And I think that probably covers in what we’ve just sort of talked about there, Jess, and it’s like, I’ve got a bill shock here. My levies are higher. I’m sort of feelings, I’m sort of feeling emotional about that because I may not have necessarily planned for that. And here are all of the reasons why the levies might have increased and what we might do to go about that. Anything you’d like to add further to that?

Jessica Beckett   19:49
Yeah, just thinking about that. So again, coming back to that clear communication. So again, in consultation with your Strata manager and your building manager as well, those notes are really crucial. And if we’re talking about really large expenses or increases, or if we’re talking about things like strata loans or special levies, really be encouraging people, even think about, is it appropriate to attach a covering letter to the AGM agenda? Do we need to have, you know, an informal town hall of lot owners? Those types of things, well, I appreciate, you know, they take up people’s time, sometimes they can be a little bit intimidating to get in front of owners. All those types of things are really going to help with that communication piece. The other point I’ve really become aware of in my years as a strata manager is around the sinking fund forecast. So although we have a sinking fund forecast for 10 or 15 years, often things are changing within a building. So there’s nothing stopping a Committee from, looking at a sinking fund forecast after they’ve done major works and thinking, you know, we had this done two years ago, but it might actually be appropriate to have a new forecast done or engage with that consultant. And is it time for a bit of an update of this? So those are the types of things I would be recommending as a Strata manager.

Peter Todd   21:02
Yeah, and particularly to those members on committees out there tonight who have joined us. Certainly, yes, we will do our best through Body Corporate minutes that we prepare for you in letting all owners know what’s going to be occurring in terms of maintenance expenditure and so on. But as Jess said, very much encouraged. I’ve lived this personally in buildings that I’ve been in and ones that I’ve managed, and I know Jess has as well, that concept of the letter from the chair that goes out with the meeting or that, you know, some sort of newsletter about things, some sort of communication, could even be a town hall if that suits buildings. We’ve certainly helped schemes run those sorts of things when there’s been major projects like lift upgrades and painting and so on. So definitely look for opportunities to communicate so that that bill shock isn’t a shock.

Now this one’s an interesting one, Jess, and you must be feeling a little bit all talked out at the moment, but we’ve prepared the budget. We’ve gone out there, but then over the course of the year, there’s been expenditure, and it looks like we’re going to be spending past our administrative budget perhaps for the year. Can the Committee halfway through the year just raise the levies?

 Jessica Beckett   22:30
No, they can’t, Peter. So, there’s a reason that the legislation sets out how budgets and contributions are determined, and these all have to go through to lot owners at a general meeting. So, you know, for anyone that is ever in that situation, and we hope that you aren’t, but, you know, unfortunately things can happen. It’s really important, again, engage with your Strata manager. What is the communication that we need to get out to lot owners? And then we would have to go through a process if you needed to raise additional funds. We would be looking at calling an extraordinary general meeting to approve a new budget and new contributions.

Peter Todd   23:08
Yeah, that’s right. So, and very much to committees and Strata managers and building managers, if anyone online tonight. This is why we’ve very much got to be prepared for the year ahead, Jess, haven’t we?

When we’re sitting down, we’ve really got to have a vision forward of our maintenance needs so that when we sit down to do that budget, we are doing it as fully informed as we possibly can to try and make that, because we absolutely want to avoid extraordinary meetings, general meetings to be looking at levy increases across a year.

Now this one is in my area. One of the things that I oversee from the people and culture side is actually customer service. And the customer service piece can come through in this people not being able to pay their levies. So there’s a couple of things that are going to happen here. Number one, levies are going to go out. There’s going to be 6 weeks’ notice of the levies being due. I know I’m probably stating what people know here, but we’re always going to send out our levies on behalf of the Body Corporate 6 weeks in advance. I’ll also highlight to people, I know my beautiful wife in my own home situation, we’ve had up to two sets of Body Corporate fees going and we’re paying those weekly by direct debit so that by the time the amount due comes about, we have enough money in credit in our account to cover those. So there’s lots of different ways that you can pay for one thing, but then it just happens in general that there are positions that people find themselves in where they cannot pay their levies. So firstly, a difficult thing there can be that people might lose a discount that has been applied to the scheme if they pay on time. And that can be things like 10% and 20% discounts, so you know, again, you want to avoid that.

As soon as people don’t pay, there can also be penalty interest and extra fees. Now, some of those extra fees go towards the money that is required to get that Body Corporate debt back from the owner. But to be fair, some of the fees and penalty interest are a penalty. They are an encouragement for people to pay on time. If people feel that those were ever applied unfairly and there were general hardship circumstances, there is a form online that you can access through the SSKB website or app where you apply to have your discount reinstated or perhaps to have penalty interest waived and that would go in front of the Committee. But I will say that everybody, the Body Corporate is its own organisation, but it is not a charity organisation. That is, any money that goes unpaid by an individual owner is less money that’s going into the total pot and there’ll be money that has been budgeted for. So SSKB is duty bound on behalf of the Body Corporate to retrieve that money on behalf of all owners and we will be very, very diligent in doing that at the same time as applying any level of common sense and compassion when owners are communicative with us about how they might be paying that debt back to the Body Corporate. But in fairness, if I was to cut through everything there, Body Corporate levies need to be paid. They are community money, and we will chase people who don’t pay those levies and avoid paying.

This one’s super tricky, Jess, and this is something that I would absolutely avoid at all costs, because it’s a big topic. What happens if we go to the annual general meeting? A budget has been proposed by the Committee. It’s in front of all owners to vote on, and the owners vote no, for the annual budget, what happens then, Jess?

Jessica Beckett   27:39
Yeah, it’s a good question, and you know, luckily something that I would say isn’t overly common, but I have seen it happen over the years. Typically, it’s when there’s going to be large or you know large increases, and you might have a group of owners sort of get together and discuss that and decide that they’re not in favour and they may then canvass other owners in the building. Now, you know, there’s a reason that owners have 21 days notice at least of that annual general meeting, and that’s to, you know, really be informed about what those budgets look like, what are the contributions going to be. And we’d really hope through that period that people could engage with the Strata manager or, you know, appropriate members of the Committee to sort of understand or have their questions answered about anything that they were concerned with. That being said, sometimes that doesn’t happen. So if we get to an annual general meeting and an administrative fund or sinking fund or both are voted down, ultimately that means that we are not then issuing those contributions. So that can have a real impact on the Body Corporate’s cash flow.

Especially depending if they do have large expenses coming up. So certainly something we’re working with you to try and avoid. However, if it does happen, what the situation would be is ultimately, we’ve got to then go back, do another recut of the budget to try and come up with something that, you know, we believe owners would vote in favour of and obviously, we’re doing that heavily in consultation with the Committee. And then we’re calling an extraordinary general meeting. So there’s obviously time frames associated with that, and it could really delay the collecting of levies by, you know, ultimately 3 months. So something that we’re really trying to avoid. And again, I come back to that clear communication to lot owners in the first instance.

Peter Todd   29:17
And again, at the core of it, and this may not make everyone happy all of the time, but is that absolute duty by the Body Corporate Committee to maintain the common property to a good condition. So that is a legislative and insurance requirement. It doesn’t say to maintain the common property if the owners like the budget that year. It’s an unending amount of money that might be required. It’s to maintain the common property and hopefully these things can be avoided.

Jenny, I’m going to bring you in here. I know you’ll have been sitting there with lots of wisdom to share over your 20 years of experience. You’ve certainly seen it all. Let’s do a bit of a deeper dive now into financial statements. So I’ll just say to everybody again, I know this is very basic. Every single owner in the building can use the Stratamax portal. Go into the Stratamax portal as an owner, you log in using the owner e-mail that’s on the role that you are registered with us as an owner, you create a password and so on, you’ve possibly done that, and you can actually download today’s financial statements. We’re going to have a look at those in a sec. You can download the financials for your building any day. Okay, these are completely transparent things. This is not a secret that SSKB and Strata managers are trying to keep from anybody. You can get online and you can have a look at where your finances are for your building holistically on any given time. Jenny, we’re going to have a look at some in a minute, but effectively when people do that and they print the balance sheet and the budget expenditure, what are they going to see?

Jenny Purcell   31:22
Yeah, so some things that they should look at first of all is it’s obviously going to say what their bank account balance is, which is clearly an important thing. We’ve been talking previously that we have something called an admin fund and a sinking fund. It will tell you what the balance of each of those funds are, which is important to look at. And a point to note there, it’s not unusual to see that an admin fund would have a low balance because generally speaking, its full purpose is just to cover operational costs and make sure it has enough to do that each year. It will also give them an indication of when they start to look at who owes the money and who of the lot owners still is owed money and also which creditors they actually owe money to.

Peter Todd   32:16
Yeah, yeah, that’s right. So that would require a little bit of a dive beyond the balance sheet, but let’s have a look at some by way of example so we can talk to that. Now, that is the one pager. That’s a building I know really well. It’s de-identified there, but we’re talking about a tower of about 70 or so lots in that building. I’m looking at that, Jenny, and I’m seeing down the far right-hand side, there’s a bunch of things I’m seeing there. I’m seeing that the end of the financial year last year was the 31st of March. So what that says to me is that fund, that budget is from the 1st of April through to the 31st of March each year. That’s their financial year. I’m seeing that at the end of last year, their admin fund was at $127,665 and their sinking fund was $449,000. That was at the end of last year, financial year. And I can see that column on the right there is all of last year’s figures. The column on the left then is where we are as of yesterday, the 29th, or today actually, the 29th of October. So we can see the amount of money that we have in the admin fund. We can see something a bit less in the sinking fund there, so I know enough for Strata managers to know there will have been some big expenditure there that the building has spent, but we’ve got a sinking fund of $181,000.

Now there, Jenny, we’ve got cash at bank of $322,958. So that’s the holistic pot of money, isn’t it, that is both the admin fund and the sinking fund.
Over history they have had a term deposit with Macquarie Bank and I can see that that’s MBL meaning Macquarie Bank and they’ve had a term deposit at the end of last year they had one for $436,000. I’m starting to piece some things together now if I didn’t know anything about that building. I can see they used to have a sinking fund and they’ve also spent quite a chunk. Sorry, they used to have a term deposit and they’ve also spent a chunk of their sinking fund. So I’m thinking that building’s probably just had something like maybe a lift upgrade or a painting or whatever. I’d be able to dig into that. Jenny, contributions build, not due.

So correct me if I’m wrong, but as I’ve said, that means that that scheme’s probably had those levy notices sent out and they’re not due yet. They’re probably due maybe the 1st of December or something like that. Would that be right.

Yeah, so that $224,000 there, contributions billed not due, that meaning that that’s been sent out and that should all going well if everybody pays, that amount of money should come in. Prepayment contributions, Jenny, how can somebody be a pre-payer?

Jenny Purcell   35:30
So all it means is someone’s paid money to the scheme in advance of, you know, or more than what their levies were at any given time.

Peter Todd   35:40
Yeah, or just ahead of the due date like that, my beautiful wife paying ours weekly, we would be ahead of the due date of payment. So that would go into that prepayment. Contribution in arrears, they really are as per program, aren’t they? That’s what we would call in this game the aged balance list. That is the people that owe levies. And the contribution and arrears in that line item, that is going to actually be the sinking fund and admin fund levies. Other arrears are going to be the insurance levy. Jess, anything else for other arrears?

Jessica Beckett   36:18
So insurance and then any arrears fees owing.

Peter Todd   36:20
Yeah, any fees that have been accumulated in us trying to get the money back. That’s right. Nothing in the prepaid expenses or interest receivable. So that you can see an interest receivable though the year before, they had $5,857. So that would be the interest that they received from that term deposit as some extra income for the Body Corporate. But the scheme needed that money, so they haven’t got that this year. Now, Jenny, then there’s the liability side of it. You’ve got GST, which obviously for a GST registered building, meaning the levies are going to be generally past $75,000 as work gets done by tradesmen, there’s a GST accounting that plays out, isn’t there, that SSKB has to oversee and then clear that with the Australian Tax Office every three months. Creditors there for $437. That would mean that, you know, there’s probably a bill sitting on the invoice hub for the treasurer to approve of $437. There’s again that amount of the contributions billed and not due, that should sort of cancel each other out, shouldn’t it, Jenny? That money sitting there as a potential asset, but also it’s not really owed yet. So it’s down there as a liability.

Jenny Purcell   37:49
Exactly right.

Peter Todd   37:52
And the same with prepayments, but these figures are different because they don’t include GST in the liability section that they do in the assets section.

All right, and then other things that are fairly obvious: contributions in advance. How do they differ from prepayments Jenny, contributions in advance?

Jenny Purcell   38:14
Contributions in advance will be, so you were just talking about that there, have been levies issued, but it’s not due date yet, so they’ve paid money towards those levies that have been issued, but are still, as I said, still not due.

Peter Todd   38:36
The balance sheet doesn’t give rise to too many questions. Then we go to the administrative fund, and this is the real meat and bones of things. And these are the things that people can look at when they download their financials. Again, if we go to the extreme right, that is the amount of money that was spent on that area last year.

Last financial year. The first column of numbers is what we’ve actually spent up until today. The second column is the budgeted amount for that expenditure for the year.

And then the third column there is just the percentage of how much has been spent as per budget. So we have a look at that building and we know that that building now is about six or seven months into its financial year. So there’s about five months left. So for a lot of things it should be at about 50, 60 percent of its expenditure for the year. And in some cases, it could be that the bill is budgeted is a one-off 100% payment. So you can see that. So our Strata managers with committees are trained to run their eye down that variance line and see things which are well and truly
beyond the budget amount and to potentially drill down on that to see, okay, well, where’s the expenditure? Can I explain that to the Committee? Can we explain that to owners? That is how our Strata managers are trained. And that’s the section that Strata managers at Body Corporate meetings with treasurers might explain those financials. Jess, anything to add to that very quick explanation of an admin fund there?

Jessica Beckett   40:29
Probably the only other thing I’d say, because it’s a common question, is sometimes when you do see a significant variance, it can just be a coding issue. So, you know, if that ever happens, contact your Strata Manager. We’ll also typically be looking at those things and trying to fix them up before meetings as well.

Peter Todd   40:45
If I draw everyone’s eye down, and I know, Jenny, we’re going to speak to this later and could actually jump into it right now, where we’ve got R&M, obviously that means repairs and maintenance. So we’ve got repairs and maintenance, building, electrical, gym, gardens, air conditioning, so on.
This is where there can need to be recoding, isn’t there, Jenny? Because it actually might be something that has been spent and the invoice has been put down against the administrative fund when it might actually need to come out of the sinking fund.

Jenny Purcell   41:19
Correct.

Peter Todd   41:20
Yep, in which case, committees speak to Strata managers, we speak to client financials, and you recode these things for us, don’t you?

Jenny Purcell   41:31
We do.

Peter Todd   41:32
Yep. Okay, again, that’s just completing the administrative fund budget there. Again, I look at that and I see that we budgeted there for $293,000 expenditure. Overall, and at this stage, we’ve spent $219,000.
And so, you know, certainly there’s been some overspends on some things. So it’d be worth us keeping an eye on that for the next five months in terms of our expenditure. Very similar to the sinking fund forecast. Obviously, generally less line items here. Again, this is a budgeting item that can be trickier, but is well worth doing. And we can see somewhat of an explanation there, see a large amount of money there for lifts. So we can see that explains that, you know, the disappearance of the term deposit, the shrinking amount in the sinking fund. And I know at that particular building, we’ve had things like town hall meetings, we’ve had communication from chairs to owners about what expenditure has been needing to happen. Jenny, statements there on income and expenditure and balance sheet. Anything further you would like to add there as Client Financials head person?

Jenny Purcell   43:00
Probably not a lot, but you know, just to say that when you’re looking at these, it’s easy to use, as you said, a column that represents a full year. If you’re wanting to look at it as a glance to see how much are the levies in the sinking fund and how much are the levies in the admin fund for the year to give you an indication of you know, how much do they raise each year to, you know, so that they can operate?

Peter Todd   44:34
I hope we’ve sort of covered that in terms of the income expenditure. Jenny, I know we’ve had this conversation about, and I think this is a question, you know, if you’re buying into a Body Corporate situation, what are the things that you’re looking at before you buy? My immediate response to that is, well, you’d be looking at the levy amounts in total, but you’d be looking at the cash at bank. You’d be looking at the amounts in the sinking fund forecast. You’d be looking at minutes of some previous meetings to see what are the big expenditure items which are being predicted through the minutes of the meetings, what would you what would your piece of advice be there in terms of looking at income and expenditure, Jenny?

Jenny Purcell   44:25
Probably what you just referred to before, Peter, the running your eye down, you know, when you’ve got a column that says this is the actual expenses and here’s my budget and looking for that variance to see how well they’re actually running the scheme.

Peter Todd   44:42
Certainly I’d also flag to everybody out there, and I know Jess has certainly walked this experience, there’s some things there where you might have electricity costs or maybe water costs, and there’s a real spike in those costs. Now, sometimes that can be because of changed amounts that those things are charging, particularly electricity. But it can also be because there’s leaking taps or maintenance issues. Jess, I know you’ve dealt with that before.

Jessica Beckett   45:14
Yeah, absolutely. And you know, it’s important to sort of be across these invoices and understand them because there are situations where, you know, there can be concealed leaks or other things that we need to get on top of pretty promptly.

Peter Todd   45:24
Yeah, so the expenditure can sometimes give rise to maintenance issues. Everybody, I’ve talked about financials. Your financial statements are going to come out at all AGMs. I absolutely encourage people though to get online, get on that Stratamax portal and have a look at the financials of your own scheme.

You know, take today’s lesson if you like, have a look at your financials and sort of apply some of those. Actually, re-watch the thing and have a look at your financials if you’ve got half an hour to kill one night, God forbid. But definitely as owner in a Body Corporate, this is one of your major assets, definitely be across the financials and you can get to them via AGM packs, but also on any given day through the Stratamax portal.

Okay, Jenny, something that has to come up every year for a Body Corporate is audits. So everybody, the standard position in Queensland is the default is that all bodies corporate must be audited each year unless owners vote not to have one.

So that’s that AGM motion that is actually worded in a quite a strange way. You vote on whether you will not have an audit rather than whether you will. And, you know, we don’t give advice. We have no skin in the game of whether a Body Corporate has an audit or not. It’s certainly part of good governance. Jenny, what does an audit of a Body Corporate finances actually check?

Jenny Purcell   47:06
Yeah, so it just it just really looks at, you know, the financials that we’ve prepared. It ensures that we are carrying out a proper process, as far as processing those transactions and ensuring that we are doing the reconciliations and recording journals that we should record.

Peter Todd   47:28
Yeah, the money’s come in and the money’s gone somewhere and it’s all accounted for and proper. Proper processes. We don’t give an answer on how often should buildings have an audit. That is very much at the discretion of the owners.

I would just say this in general. So in New South Wales, if your building has more than 100 lots, you’re going to have an audit each year. In Victoria, if your building has more than 100 lots or collects more than $250,000, you will have an audit each year. So I’m not saying that needs to apply to Queensland, but there is a bit of a general vibe there that almost the larger the building and once you’re over 100 lots and the income from levies is high, certainly don’t be discounting an audit by a third party.

Jess, I’m going to go to you. Insurance is a big part of the annual levies. Talk us through Body Corporate insurance must knows.

Jessica Beckett   48:43
Well, there’s a lot we could talk about.

Peter Todd   48:45
That’s its own lesson, isn’t it? 

Jessica Beckett   48:50
That’s right. I think we’ve done another sort of webinar on that. Generally speaking, there’s a misconception that the Body Corporate insurance policy covers everything. So again, we try and be communicative with lot owners to make sure that they’ve got specific advice about each scheme. But generally speaking, a Body Corporate must ensure for the full building replacement value in Queensland. And also their policy is going to cover other items such as, you know, Office Bearers cover, it’s going to have public liability, machinery breakdown, those types of things. Really, again, common analogy people have probably heard if they’ve been at other Strata education events is that if an apartment, and I’m talking about building format plan, in this case, if an apartment is flipped upside down, anything that doesn’t fall out is typically or generally going to be covered by the Body Corporate insurance policy. Anything that falls out is going to need to be considered under a lot owner’s own contents policy. However, really important to get specific advice in relation to your own individual policy, but that’s just a very general overview.

Peter Todd   49:51
Absolutely, and I know one of the questions that came in in advance, Jess, was, why do we have to pay a premium based on the cost of replacement of the whole building? That’s just the legislative requirement, that’s Australia-wide.

There’s nothing we can really do about that at the moment. If there is only damage to a part of the building, then obviously the payouts are proportional and things like that. But there’s no alternative to that at the moment. And potentially, there really isn’t an alternative because every now and then there can be a catastrophic event for a building. Righty-o, we have Committee spend limits. Jess, what are the story with Committee spend limits?

Jessica Beckett   50:35
That’s right. So Committee spend limits are set by the Queensland legislation. So Committee spend limits always start at $200 per lot, including GST. So this again applies to schemes that fall under the standard and accommodation module.

So any scheme under a commercial module, they actually have no spending limits. It’s quite common for bodies corporates to actually increase the spending limit, but this needs to be done at a general meeting and approved by lot owners. But what this is saying is that if it falls within the Committee spending limit, the Committee can approve it. They don’t need to present it to owners at a general meeting.

Peter Todd   51:11
All right, and there’s a thing called the major spend limit, and that requires 2 quotes. Jess, again?

Jessica Beckett   51:17
That’s right. So again, set out by the Queensland legislation. So this starts typically at the lesser of $1,100 per lot or $10,000. Again, quite common for bodies corporates to increase the major spending limit at a general meeting. And what this is saying is that if you have a quote that falls above that amount, you need to get at least two quotes to be considered. Now, that being said, it doesn’t mean that the Committee can’t then get multiple quotes for other works that fall under this limit. But if it hits the major spending limit, that’s a legislative requirement.

Peter Todd   51:54
Again, a side lesson that is tricky for people to understand. In a Body Corporate situation, when it comes to the common property, Jess, we look at the picture there. There is maintenance, and maintenance is effectively the like for like fixing of whatever is present. So, for example, in that scheme in the picture, if we repainted that building exactly the same as that, that would be maintenance painting, but an improvement would be something that would be a tangible change to that building, so it could be that we’ve decided to paint it in a different way. It could be that we’ve put something on those windows on the outside, which is seen as an extra that’s not there, or to change the windows themselves. It could be that we’re putting on some sort of cladding or something that’s going to be some sort of material change to the building, that’s then deemed an improvement. And that’s different from maintenance, Jess, isn’t it?

Jessica Beckett   53:00
That’s right. And again, the Queensland legislation sets out various improvement limits. So we’ve got there the basic improvement limit, the ordinary improvement limit, and then others. I won’t go into all the specifics about these, but again, when you’re getting quotes, it’s really important. Have a chat to your Strata Manager and bring them into the conversation because that’s where they can give you the advice on, you know, is this budgeted for? Can the Committee approve it? Is it an improvement or maintenance? Those are all the types of things we can guide you on.

Peter Todd   53:29
And just an improvement might just see a slightly higher threshold in the voting of 66% of all of those people that vote. That is a special resolution. Righty-o, Jenny, we’re into some mysterious ground now, that concept of Body Corporate tax. Jenny, do Body Corporates pay tax?

Jenny Purcell   53:51
Generally not. It’s generally deemed that the levies, a Body Corporate raises its money by issuing levies. Levies is deemed to be tax-free, but from time to time, different Body Corporates can raise money from other sources. You know, that might be a rental situation and then those sources of money are actually taxable, the same as interest that they receive on a term deposit is taxable.

Peter Todd   54:19
Yeah, so we have the odd building, don’t we, Jenny, that has a mobile phone tower on top of it and there’s some sort of lease with Telstra or Optus or Vodafone and effectively all of the owners, it comes back into their levy amounts, or it comes back into their overall cash at bank. But each of the owners has effectively got that small amount of income against them, haven’t they? Yeah, and that’s worth having a conversation if you need to understand that further. Pretty rare.

We’ve got an aging asset, we’ve got a sinking fund and we’ve got a forecast, but we’ve got money that we’ve got to spend. Jess, happy to chew the fat with this one with you. I know you know my own situation. I live in a beautiful historic building.

It’s over 100 years of age. It’s got a heritage listing overlay. Gorgeous, gorgeous building. But it’s also been sort of 20 plus years since it’s been turned into units. So we’ve got things like aging lifts, waterproofing, issues that are being coming up and this has given rise to special levies for owners because there are amounts of monies that are needing to be raised beyond what was the sinking fund forecast. I’ve got other buildings that I’m looking after in which bodies, corporate committees are terrified of special levies, which I understand, and they’re very, very reluctant on the one hand to do the work, but there’s that maintaining the common property and there’s the need to get insurance. This can be quite the dilemma for committees, Jess, can’t it?

Jessica Beckett   56:07
Absolutely, and you know, to your point, a lot of people are worried about special levies. What I would say is they’re not necessarily always a bad thing. So, you know, you shouldn’t, I don’t think we should think about special levies and think that all automatically means financial mismanagement and things are going wrong. But again, with the introduction of special levies, you need really, really strong communication to Lot owners to basically take them on that journey, which I’m sure has happened in your own personal experience as well. Because without that, you just will not get people voting in favour of those. And you know, if you actually need those special levies to, you know, upgrade and you know, keep the maintenance of that scheme coming, that can become really critical.

Peter Todd   56:49
Yeah, and I know for me, this is me personally oversharing, but…
in buying into that scheme and in doing the due diligence on meeting minutes coming up, I could see in those minutes before I bought that there were going to be waterproofing things coming up and a lift upgrade. So I knew that there would be special levies and you know, my wife and I put some money aside for that.

But again, it’s that engaging really head on with the financials of the scheme, due diligence, keeping ahead of that. And committees out there, work with your Strata manager on a communication plan if you’re seeing that that sinking fund is really not going to cover what you need to do?
Righty-o, there’s unexpected things. We’ve got cladding issues, Jess, or we’ve got lifts that are just breaking down. We’ve just got something that we haven’t really expected. Who’s going to pay?

Jessica Beckett   57:46
Very good question. So look, you know, ultimately there’s a process we’ve got on the screen there that you need to go through.

But generally speaking, what we would need to determine first, is it common property? So is it the responsibility of the Body Corporate? Secondly, if it is, I’d be looking at things like, is this repairs and maintenance? Is this something that could be an insurance claim? Now, again, just very generally speaking, insurance typically is only going to cover the resultant damage.

So an example of this is if you had, if you needed to do repairs to a waterproofing membrane, the insurance policy typically wouldn’t cover the costs of repairing that membrane, but it might then cover the costs of, you know, any resultant damage within a lot. So, you know, walls, skirting boards, those types of things. So we’re always going to be asking the broker for that specific advice about your policy.

And then we’re trying to figure out, well, how are we going to pay for this? Are there enough funds? Do we need to consider a Strata loan? Do we need special levies? And then we’re also looking at quotes as well. So with these quotes, can the Committee approve it? Is it within the budget? Do we need to go to a general meeting? And, you know, how do we make, again, communicate this really clearly to lot owners? So there’s a full process to go through. And again, that’s going to normally be completed in consultation with your Strata manager, your Committee and a building manager if you have one.

Peter Todd   59:05
And again, to everybody speaking very personally, I know I always will wrestle with the concept having now lived in a Body Corporate situation for some years. And my story was I sold a house at Nundah to move in closer to where restaurants and whatnot. But when I lived in my house at Nundah, I had maintenance expenses. I had to paint my house. I each year I would wash it down, do the windows, obviously lawn mowing, all of those things. So, you know, buildings have maintenance costs and just moving into a Body Corporate doesn’t mean that those costs are done. Rightio, Jenny, Jess, what does a healthy Body Corporate look like financially?

Jessica Beckett   59:46
Well, again, very good question, Peter. And look, I’m going to give you my view, which I know not everyone would agree with. So in my mind, a healthy Body Corporate is a scheme that doesn’t shy away from talking about, you know, the financials. The Committee is proactive and they’re looking to repairs and maintenance of common property. And they’re also planning for the future as well. So thinking, you know, five years ahead or we’re wanting to do these types of projects and taking lot owners on that journey. And I’d also say as well, you know, don’t shy away from increases. So, you know, think about is it going to be more palatable for lot owners to have, you know, a CPI increase to their admin fund each year rather than no increase. And then in five years, you know, you’re looking at a 15 or 20% increase. So those are the types of things that I’m often talking to the committees I work with about.

Peter Todd   1:00:34
Awesome. Jenny, would you like to add anything to that?

Jenny Purcell   1:00:36
The only thing I’d probably add is, you know, I think it’s a healthy thing to scan those financials when they are sent to you or, as you’ve suggested, they download it because it keeps you informed, it lets you know, what’s happening within the Body Corporate.

Peter Todd   1:00:55
I actually very much apply a framework here myself when thinking about the Body Corporate finances. By way of example, it could be a set of townhouses, you know, 20 townhouses in a suburb. Well, that building, the replacement value of that asset might be $20 million. So if I had a company that was worth $20 million, I know that I’d want a really good executive team to be looking at the costs, keeping across the costs, making sure that I was keeping the company going, happy, sustainable for the future. And we can apply all the same things to our Body Corporate.

Whatever our building value is, it’s going to be a number with a lot of figures. Committees are volunteers, but they very much need to apply a commercial sense along with the owners of that Body Corporate to make sure that they have a sustainable asset moving forward. And that takes planning and decision making.

Five things worth remembering. Your levies fund both today’s costs and tomorrow’s needs. Your admin and sinking funds serve different purposes. Your budgets should reflect actual and future needs. Financial statements help show the full picture and understand the rules. Understanding the rules makes decisions easier. And I know as has come up many times tonight, everybody get engaged in your financials. I know it’s probably not the sexiest thing to be doing looking at your Body Corporate finances, but please I encourage you to do so. Now, I wanted to advertise, we are trying very, very hard at SSKB to be Body Corporate education leaders, and I had feedback today from a Body Corporate solicitor that just no one in Queensland in this business is doing as much as we are in trying to educate people in this Body Corporate space. And one of the things that we have done is we’ve released a number of self-help booklets and our latest self-help booklet is about tonight’s topic, that is understanding our Body Corporate finances. And I know Maggie from our marketing team, we’re going to be sending a link out to that booklet to everyone that’s registered for this seminar tonight. So please download that booklet. I know a number of those copies of hard copy of those booklets will be heading out to our Committee meetings and to new nights that we’re having coming up. So definitely please, there’s nothing to hide from our end there in terms of transparency, encourage you to have a look at that booklet.

I’ve stopped sharing screen now and I’m going to go to our questions. Thank you for staying with us. I hope that you have learnt something. I am conscious of time.

Somebody asked me about those financials and about why the term deposit goes to zero balance at the moment and that would be because that term deposit would have matured and that money will have gone back into cash at bank.
Next question.

Fairly specific one. We’ve discovered that a retaining wall in our complex needs to be rebuilt. Unexpected, wasn’t included in the budget and we don’t have sufficient funds. So that’s one of those tricky things. Would we raise a special levy to pay for the work. Jess, fairly specific to a building, but things that do happen. So it’s over the course of the year, there’s been a large unexpected cost. What would you be recommending there?

Jessica Beckett   1:04:50
Well, there’s probably a few different options to consider. So depending on the urgency of the work, if it is something that could be put off potentially to your next AGM and looking at those budgets, you could consider that. We also talk to people about can you stage works over years. If you talk about a retaining wall, I would imagine that’s pretty urgent. So ultimately, yes, you probably are looking at a special levy. So you’re going to need to determine what that looks like, what period you need to collect those funds over, because obviously, that’s going to determine how quickly you can pay that creditor and get the work done. But ultimately, it has to go to a general meeting and it has to be approved by lot owners. And then you’re still going to have about at least a six week period of sending that levy notice out before June.

Peter Todd   1:05:35
That is tricky, and again, that communication piece, absolutely essential. If other owners don’t pay their levies on time, does that mean that the people that have paid on time have to pay more. No, people’s levies set out in the AGM are the levies that everyone pays in a year. And I can tell you that if people do not pay on time, SSKB will be chasing those monies on behalf of the Body Corporate Committee and the Body Corporate to going to the extent after three or four months of turning that into a legal debt collection situation. On the positive, we get about 99.5% compliance of all levies across 44,000 plus owners. So, you know, generally those monies do not go uncollected, but it wouldn’t see an individual owner paying more levies.
How do we look after the balance of the long-term needs and the sinking fund while trying to guard against, you know, cost of living crises and so on? Jess, again, it’s literally a matter of everyone doing their best, isn’t it?

Jessica Beckett   1:06:47
Oh, absolutely. And I think, you know, I know how, you know, horrifying substantial increases are for people and how much we want to avoid them, but if you’re putting off maintenance and things like that, it’s never going to end well in the long run. So, you know, again, look at different options. I mentioned earlier in the Webinar, you don’t have to wait five years to get a new sinking fund forecast. You can actually look at our sinking fund forecast isn’t maybe fit for purpose for where we’re currently at. Should we get a new one and that’s going to guide you and you can look at different options along the way.

Peter Todd   1:07:17
Yeah, Jenny, for your accounts payable department, various bills come in and they’ve got to be paid by the Body Corporate. How do they know whether to put them against the sinking fund or the administrative fund?

Jenny Purcell   1:07:32
Well, sometimes it can be difficult for us because we’re not always involved at the Committee meetings to what they’ve discussed and we talked about that earlier, that can result in recoding. But generally speaking, we will use our knowledge to ascertain like does this reasonably look like it’s an admin or sinking fund expense? The larger amounts, yeah, larger amounts would normally indicate, you know, that it’s a sinking fund.

Peter Todd   1:08:06
Yeah, and there’s some sort of level of common sense that’s applied, isn’t it, in the knowledge of having done this line of work for 40 years, SSKB, quite detective-like in working out which one might go where.

How do insurance costs affect premium? Well, they’re sort of similar things. I’ll just say on the insurance to everybody, and again, this is not something that’s always in control. Again, insurance is not a charity. Insurance exists for people to make money, and it is a significant industry in Australia.

When there’s bushfires and floods and down to when there’s catastrophic bushfires in California and half of Los Angeles burns, these actually affect the cost of sourcing insurance across the world and insurance goes up. We’re blessed at the moment, Jess, we’ve been in a fairly flattening market on the insurance front. So we have seen a lot of rises, but over the last year or two, there’s been a flattening of that to some degree in the insurance space. I don’t think necessarily premiums have gone backwards, but there has certainly been a flattening. So we certainly send positive thoughts to this summer, that we avoid some of those things that can see insurance rises go up.

So maintenance work is done in a Body Corporate. It’s got a significant cost to it. Who’s got the duty of care to say from that scheme, yes, that was work well done and we’re happy to pay for that. It was a good job. Jess, who does that?

Jessica Beckett   1:09:46
Yeah, well, I guess just really generally speaking, it very much scheme specific. I mean, ultimately, you know, the Body Corporate’s got an obligation to maintain common property, so that transfers to the Committee. You might have a building manager, their caretaking agreement is going to set out their duties, which might talk about things like supervising tradespeople, those types of things. So very much specific, but ultimately, a lot of that work does fall down to the Committee to do.

Peter Todd   1:10:14
Buildings absolutely need enthusiastic volunteers, Jess, don’t they? And I know we work very hard as Strata managers to try and harvest and cultivate that culture. But it’s certainly worth regular walk arounds of buildings with committees together. People walking around with the building manager if there is one on site, having a real collective responsibility for those maintenance needs. So again, we can plan in budgets, we can address things that need to be addressed. Due diligence before we buy into a Body Corporate. Again, Jenny, would be looking at cash at bank.

Jenny Purcell   1:10:52
Cash at bank, balance of both the funds, admin and sinking, profit and loss is going to tell you how much their levies are in a given year. So, run your eye over that variance, actual to budget, say, does it look like it’s been well managed?

Peter Todd   1:11:09
Yeah, I know before I bought into a Body Corporate five years ago for the first time, somebody said to me, get a number of years worth of Committee and AGM minutes and just read over them all. And I know that that was really good for my wife and I to do that. We could see all of the things in the building that we were buying into, and none of it was a worry, which was positive. And we could see sinking funds and admin funds and so on.

What happens when sinking funds are just sort of set sort of too low originally, Jess, and, you know, maybe it’s early on in a building’s life, and where there’s probably a concern that levies might need to be raised? That can come up from time to time, can’t it?

Jessica Beckett   1:11:57
Yeah, absolutely. And I think, you know, my advice as a Strata manager would be, you don’t want a special levy probably for something like that. But at the time of preparing the budget, I’d be recommending, you know, looking at your sinking fund forecast and your balance and trying to get that back on track, which again is going to take a lot of clear communication to lot owners.

Peter Todd   1:12:17
Yeah, last one I’ll throw to both Jess, yourself and Jenny, and I know I’ve got an opinion on this as well. You’ve got a whole bunch of money cash at bank. Perhaps you’re halfway through the financial year, but regardless of that, any time in the financial year, you’ve got a bunch of cash at bank. Should you go about investing in a term deposit and what are some of the decisions that would go into working out how much should you put in a term deposit, if any?

Jessica Beckett   1:12:45
Well, speaking what I do from the Strata Manager role, so, you know, we’re looking at that cash at bank to try and prompt committees. Obviously, we can’t give you financial advice, but we can kind of make a suggestion, you know, this balance is sort of building up. We know what you’ve got going on. There might not be projects coming up. What we’re always thinking about is when is your insurance premium due? So we always make sure that we’ve got funds for that. And what we can do as well and encourage people to consider is we can work with our client financials team, and Jenny, I’ll throw it to you to do a cash flow forecast.

Jenny Purcell   1:13:15
Yeah, and I totally agree, Jess, with what you said. You, you know, before determining do you need to tie up money, you would be looking at big ticket items like the insurance. Have they got a project going on? So are they about to get, you know, builders in to do certain things, and there are options to where is it a term deposit or do you put it at call because you have got a project going on which will at least get you some more interest rather than tie up the money and put it in a healthier position.

Peter Todd   1:13:50
All right, Jess and Jenny, thank you so much for tonight. We have been going now without drawing breath for about an hour and 10 minutes. We’ve covered a lot of ground on finances. I hope people have found that useful. Everybody out there, this is, you know, unashamed in a way, but I know this is a bit of a plug.

If you have found tonight useful, we strategically are working really hard to be leaders in this state in Body Corporate education. So we’ve put on over 25 nights this year with things like this. We’re releasing booklets to the public. We’ve even run open nights of webinars, where people aren’t in SSKB Buildings, just to fill that space. People like Jess and myself are doing work with building managers and ARAMA and education programs, so we’re working very, very hard to try and educate our customers on Body Corporate. If you felt tonight was useful, please give us a five-star review. It’s just a tangible way that that can help get the word out that SSKB is a good Body Corporate manager to have and that might help us. And certainly it’s just, if nothing else, it’s a good affirmation for what we are attempting to do and that is to be an industry leader in knowledge and knowledge sharing. Everyone, thank you for tonight. We hope in talking about Body Corporate finances, we haven’t sent anyone to sleep. I hope you enjoyed tonight, perhaps with a glass of wine or a beer. And if you’re watching this on recording, thank you for taking the time to watch us. Everybody, I wish you all the best and goodnight.

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