Residential property stakeholders face a broad range of cash management challenges. And while financial considerations are key, they can be hard to tackle without the right services, advice, and expertise.
Here to discuss some common cash obstacles and available solutions is Nancy Matheos, Assistance Vice President and Deputy Manager with Canadian Western Bank.
What are among the most common cash management issues for property managers, owners, or board members?
CDIC [Canadian Deposit Insurance Corporation] coverage is certainly number one as they all have requirements to have all or a vast majority of their funds covered. Every property manager/ board we have dealt with has had the same concern keeping reserve funds separate from their operating and finding high-interest vehicles that can be separate, flexible, and offer some liquidity for reserve funds.
Another common challenge is being able to auto-debit renters or residents (in the case of condominiums) and pull one-off payments as needed, as well as deliver convenient and effective timing to deposit monthly where cheques are still collected.
What about on the regulatory side?
Regulations are always changing in this industry. Although they don’t always have to do with banking, property stakeholders need to stay on top of them. That’s where working with a third-party financial partner can be extremely helpful in staying on top of regulations and getting the best insights and advice.
What are the risks of not handling these cash management issues effectively?
The most obvious risk is financial loss, but there’s also the risk of losing tenants, whether they have been with you for years or recently moved in. Owners also risk receiving a Special Assessments to Owners if reserve funds are not managed well and a need arises.
How does one begin to address these challenges?
The challenges are common, but each property is unique. Ultimately, when we meet with new condo clients, we try to understand the whole picture, from the number of units they manage to what the long-term needs and goals are for the group. You need to do that high-level review of the whole business and the people, and not just the finances, so you can plan accordingly, optimize interest, and ensure the safety of your funds.
What financial products/services are available to assist with that?
Canadian Western Bank, Canadian Western Trust, and Valiant Trust can all hold funds covered under CDIC, providing property owners three times of insurance if used fully.
As for specific solutions, our business savings account has a very competitive interest rate with full liquidity and no monthly fee. We also offer Short Term GIC’s and our 93 Day Flex Notice Account with very competitive rates and the flexibility to lock it in for a short period of time – all of which can be renamed to reflect Reserve Funds to keep them separate.
As for the issues of auto-debit, CAFT is our EFT/Direct deposit system and can be tailored to fit the needs of the condo plan/association, whether that’s pulling monthly payments on an automatic schedule; having separate profiles for credit or debit; or the ability to separate profiles for regular fees/rent, utilities, manual payments, reimbursements, etc.
Lastly, we have services like our Remote Deposit Capture (RDC), which gives clients the ability to deposit cheques from the convenience of their office. Additionally, our Business Online Banking platform consolidates accounts to one login so that owners can see all property bank accounts on one platform.
Dealing with cash management issues is part of the job in property management. Nevertheless, busy schedules and knowledge gaps can make this aspect of the role a challenge. Herein, there is value in seeking financial partners who can look out for your best financial interests.
For more information, visit www.cwbank.com/find-your-focus.