Cash Management Solutions for MCSTs
Optimise sinking fund returns while maintaining liquidity
Grow your MCST’s sinking fund with our fuss-free cash management solutions.
Is Your MCST’s Sinking Fund Sitting Idle? Here is How to Earn Higher Interest Safely
Many Management Corporation Strata Title (MCST) committees in Singapore oversee millions of dollars in sinking funds and maintenance fees, yet these funds are often underutilised. Most MCSTs keep their reserves in traditional bank accounts, earning as little as 0.5% per year. Over time, inflation erodes the value of these funds, reducing their purchasing power and effectiveness for future maintenance or capital projects.
As maintenance and operational costs rise, MCSTs need to explore alternative ways to grow their reserves without taking on unnecessary risks. By considering better cash management strategies, MCSTs can increase their sinking fund returns while ensuring that funds remain fully accessible when needed.
MCST Sinking Funds Are Losing Value Over Time
Many MCSTs rely on bank savings accounts or fixed deposits to store their sinking funds. While these accounts offer high liquidity and security, they often provide minimal interest returns. The following are some of the common challenges that MCSTs face when managing their sinking funds.
- Sinking funds remain idle for extended periods. These funds are set aside for long-term maintenance and repair work, yet they earn little to no interest during the waiting period.
- Low interest rates on bank deposits. Traditional bank accounts offer interest rates that barely keep up with inflation, reducing the purchasing power of sinking funds over time.
- Lack of awareness about better cash management options. Many MCSTs are unaware that there are low-risk, high-liquidity alternatives that can provide higher interest returns while maintaining accessibility.
- Sinking funds remain idle for extended periods. These funds are set aside for long-term maintenance and repair work, yet they earn little to no interest during the waiting period.
- Low interest rates on bank deposits. Traditional bank accounts offer interest rates that barely keep up with inflation, reducing the purchasing power of sinking funds over time.
- Lack of awareness about better cash management options. Many MCSTs are unaware that there are low-risk, high-liquidity alternatives that can provide higher interest returns while maintaining accessibility.
To prevent the erosion of funds due to inflation, MCSTs need to consider better cash management options that provide both security and improved returns.
How MCSTs Can Maximise Sinking Fund Returns
By shifting from traditional low-interest bank accounts to more optimised cash management solutions, MCSTs can significantly improve their sinking fund yields. The table below compares the returns and features of different fund management options.
|
Factors |
Cash Management Solutions |
Traditional Bank Deposit |
|
Interest Rate |
Approx. 2-3.5% per year |
Approx. 0.5% per year |
|
Liquidity |
High |
High |
|
Risk Level |
Low |
Low |
|
Access to Funds |
Next-day |
Immediate |
MCSTs that explore smarter cash management solutions can earn significantly higher returns on their sinking funds while keeping their capital protected. By choosing the right solution, MCSTs can ensure that their funds remain accessible while generating additional interest income.
How MCST Cash Management Works
To optimise sinking fund returns while maintaining liquidity, MCSTs can follow a structured cash management approach.
- Deposit MCST funds. Move sinking funds into an interest-bearing cash management solution that is specifically designed for liquidity and capital preservation.
- Earn competitive interest. Benefit from interest rates that are significantly higher than traditional bank savings accounts.
- Maintain full liquidity. Funds remain accessible with next-day liquidity, ensuring that MCSTs can withdraw cash when required for major repairs or maintenance projects.
- Deposit MCST funds. Move sinking funds into an interest-bearing cash management solution that is specifically designed for liquidity and capital preservation.
- Earn competitive interest. Benefit from interest rates that are significantly higher than traditional bank savings accounts.
- Maintain full liquidity. Funds remain accessible with next-day liquidity, ensuring that MCSTs can withdraw cash when required for major repairs or maintenance projects.
By using this approach, MCSTs can increase the returns on their sinking funds without taking unnecessary risks.
Who Can Benefit from Optimised Cash Management?
Optimised cash management strategies are suitable for a variety of stakeholders involved in condominium management and property maintenance. The following groups can benefit from implementing a higher-yield cash management approach.
MCST committees managing significant condominium sinking funds
Committees responsible for overseeing MCST finances can enhance their financial planning by improving cash management strategies.
Property management companies handling multiple estates
Property management firms that manage sinking funds for various condominiums can use better cash management options to maximise returns for their clients.
Condominium finance teams looking for safe investment options
Finance teams responsible for managing operational and maintenance funds can consider solutions that provide higher returns without compromising liquidity.
For MCSTs and property management companies managing large reserve funds, optimising cash management strategies can generate additional income while ensuring that funds remain available for long-term use.
Steps to Get Started with MCST Cash Optimisation
MCSTs can take the following steps to begin optimising their sinking fund management.
Schedule a free consultation
Speak with a financial expert to assess the specific needs of the MCST.
Receive a customised sinking fund optimisation plan
A tailored plan will be provided based on the size of the sinking fund and liquidity requirements.
Start earning higher interest/yield
Implement the recommended cash management strategy to generate better returns while keeping funds accessible.
By following this process, MCSTs can ensure that they are maximising the potential of their sinking funds in a structured and secure manner.
Take the First Step Towards Optimised MCST Sinking Fund Management
An MCST’s sinking funds should not be left idle in low-interest bank accounts. By adopting an optimised cash management strategy, MCSTs can earn higher interest while keeping their funds fully liquid.
To learn more about how an MCST can enhance its financial strategy, schedule a free consultation today.