💰 Strategic Cash Flow and the Truth About Strata Levies

One of the misconceptions I often hear in strata is:

“The strata manager increased our levies.” But that’s not really how it works.

The AGM is the owners’ meeting, and it’s the place where the budget and levies should be discussed, questioned and ultimately decided by the owners.

A good strata manager’s role is to provide guidance — to look ahead at the scheme’s expenses, understand when the money will actually be needed, and help owners make an informed decision about how best to fund them.

This AGM was a great example. 👇

I had proposed an increase in the Administrative Fund levies because the scheme’s insurance premium — its single biggest expense — falls due in February.

Rather than simply accepting the proposed levy instalments, the owners discussed options. The outcome?

They agreed to collect higher levies over the next two quarters, ensuring sufficient cash would be sitting in the bank when that large insurance bill arrived. Then, once the premium had been paid, the final quarter levy would reduce, giving owners some welcome relief. That’s smart budgeting. 💡

What are the alternatives?

The alternative could have been to keep the levies lower and then use premium funding to spread the insurance cost — but that comes at an additional cost to owners. These owners didn’t want to pay financing costs when they could simply structure their levy instalments around the scheme’s cash-flow requirements.

And why should they? The important distinction is:

The owners decide the levies. The strata manager guides them to ensure sufficient funds are available when they’re needed.

Levies don’t necessarily have to be identical every quarter. What matters is having an appropriate budget, understanding the timing of expenditure and making sure the strata company can meet its financial obligations when they fall due.

There are often different ways to achieve that.

Good strata management involves explaining why the money is needed, when it will be needed, what the options are, and allowing owners to make an informed decision.

That’s the difference between simply raising levies and actually managing a scheme’s finances. 🏢💰