OACS director of financial development gives schools cash flow advice
At a recent Banking 101 workshop, the Ontario Alliance of Christian Schools (OACS) director of financial development Jennie Das encouraged schools that still use an Aug. 31 year-end to move to an earlier tuition payment plan.
The focus of the workshop was to determine how many schools are using an Aug. 31 year-end and have difficulty with cash flow. Das says she found most schools are still operating with Aug. 31 as their year-end.
“I think a lot of the schools are still using an old model,” says Das. “I am trying to encourage schools to move to a different payment system.”
Receiving tuition much earlier helps to ensure schools are able to pay their bills on time. The old model has teachers being paid September to August — the same time as when tuition is due, which is difficult for planning and leaves no room for last minute circumstances.
“You could open the school door and find out some families haven’t arrived and you’ve got teachers hired to educate students that aren’t there,” says Das. “(The earlier tuition plan) is meant to prevent that kind of surprise.”
The new model has parents paying earlier than September, for example from July to June. When parents have started paying prior to the school year commencing the school will be able to pay the bills and have less enrolment surprises.
Schools who feel the Aug. 31 year-end is going fine have less incentive to move to a new system. For other schools with difficult cash flow there may be many issues including budget deficit problems. Das says deficits may occur when there is a lack of pre-planning and negative surprises arise.
“I need to get out into the community more with this information and help schools transition a little more,” says Das.
To transition to an earlier tuition payment plan schools need to develop a systematic approach. Das recommends the following:
- decide on the goal
- decide on the steps and move one step at a time, adjusting the goal if necessary
- “grandfather” existing parents where necessary
- change year-end to July 31
- do not send out start-up of school year mailing to families who have not made their tuition commitment
The traditional way of dealing with cash issues at the end of year is to let parents know there is a shortage and bill them, or let staff members know and pay them less than planned. More foreward planning and moving the system to an earlier tuition payment plan as quickly as possible can help prevent this situation.
“This is the time to start thinking about it for the next school year,” Das says. Schools begin the planning through their committees and at the spring membership meeting can start to roll out a plan.
Other cash flow tips include establishing an operating line of credit when times are good, use a CIBC banking plan and move towards a “tuition free” month (July).
Das says schools struggling with cash flow still working with tuition payment over 12 months should contact her at to develop a transition plan to receive the money sooner.