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What is the difference between a sinking fund and a reserve?

Zenya Allen
Zenya Allen
  • Updated

The managed block may have two pots of money withheld for future capital and revenue expenditure.

  • Reserves are monies withheld from previous budgets
    • They can be used at the end of each financial year to cover any deficits the current Service charge budgets have incurred. It’s not recommended to release this money part way through the financial year
  • Sinking funds are monies which have been earmarked for a specific capital expenditure
    • To create the demands for the sinking fund, you will need to create a standalone schedule with one budget, with the heading of Sinking Fund
    • These monies are then withheld until the specific project starts, expenses associated with the project selected

This article includes: 

Set up expense types

First, you will need to set up expense types specifically for selecting as Sinking fund expenses.
For more information on Service charge user defaults, click here

Sinking fund statement

On both the Management Company and Landlord Information records, there is the option to produce a Sinking Fund statement. The option is also available when creating a payment.

  1. Double click Management Company from the side menu
  2. Select the relevant Management Company 
  3. The Bank Details tab is displayed. In Statement Content, select Sinking Fund to view the sinking fund payments
    1. Alternatively, click Payments
    2. In Statement Content, select Sinking Fund to view the sinking fund payments