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How to Make a Sinking Fund. Thatâs when we learned how to make a sinking fund. A sinking fund is not a complicated financial concept. In fact, itâs one of the simplest financial concepts to understand. Basically, a sinking fund is the act of saving a little money every month for a large future expense.
Funding a Warranty Reserve Producers plan for warranty costs through a fund called the warranty reserve. The manufacturer contributes to the reserve in the following ways: 1. Fund the reserve initially with seed money. 2. Set aside a fraction of each sale for the reserve. 3. Contribute (or deduct) from the reserve at regular intervals.