Financial Management & Administration

It seems like most people who are passionate, progressive educators do not usually have a lot of experience with the details of running a business. We have seen many competent people become overwhelmed with managing the business details of a school. It's best to eliminate as much paperwork and detail management as possible by automating financial processes. Examples of things that can be automated are tuition payments, bank deposits, bill payments, payroll deposits, and tax payments. When these things are working smoothly, the remaining details don’t feel so overwhelming.

Stressed out administrators do not improve the culture for staff or students.

Projecting & Managing Cash Flow

Your budgeting in the financial planning section provides a basic framework and spending priorities, but the day-to-day reality of managing money is never quite as simple as the budget implies. The better you get at managing your money inflows and outflows, the more of it you can automate. You'll have less stress, because you know the money will be in before it needs to go out.

Principles of Good Cash Flow Management

Some of these are obvious, but that doesn’t mean they’re easy. Most of us do not enjoy having the challenging conversations that are required to get cash in the door. We all want to be flexible and compassionate of others' financial challenges. If your school has enough cash reserves or reliable revenue flow, then you may be able to afford the luxury of being flexible with a very few families.

Build some cash flow muscles by practicing these principles.

• Be clear about WHEN you get paid. Your enrollment contracts need to specify both amount and timing of payment. When possible, automate those payments to happen on those dates with no delays. Of course, a related issue is being clear about WHEN you have to pay others: rent, insurance, payroll, bills, etc.

• Don’t spend what you don’t have. On one level this means don’t spend money that isn’t in your account, but on a deeper level, it also means having the timing of money set to arrive BEFORE you perform the services someone is paying for. For example, if your fiscal year starts in July, your school year starts in September, and you’re paying your staff year-round, then you are two months into paying your staff before the students show up. The tuition deposit should have covered that, but the next payment should probably be by September 1st. That way, if there is a problem with a family paying it, you are resolving that problem while you’re providing your service, not after.

• Always keep a margin of error. Ideally, you will have some cash reserves, or at least a line of credit that you can draw on in an emergency. But this also means that you should learn how much you should be underestimating your income, and overestimating your expenses. You will lose some families and students and have some unexpected expenses; it happens. Get used to managing your cash flow with an appropriate margin of error for these things.

When the timing and margins for income and expenses are clear, you can have a nice automated cycle where you get paid before paying out. At this point, you can schedule all the payments, and it will take very little management after that. Sometimes getting set up may require a small fundraising effort to get your cycle lined up well. When it’s not timed well, it will waste a lot of people’s time and energy and be a continual source of stress and distraction from your deeper purpose.

Sample cash flow worksheet <worksheet>

Getting Started with Admin Automation:

• Hire a small accounting firm for some of these tasks (bookkeeping, paycheck processing, payroll taxes, and annual tax forms). It may seem like you don’t have the money to pay one, but the lost energy from being stressed about these things will detract more from the value and culture of your school than the accountant will cost. You should be able to find a firm willing to do it all for around $200 per month. Use the time saved to find another student, which should more than pay for it.

• Pay the small transaction fees to have people pay their tuition electronically and have it automatically deposited to your bank account. See below for how to set this up using Quickbooks.

• Direct deposit of paychecks will reduce your staff’s stress too.

• Set up automatic payments from your bank account for your rent, utilities, and liability insurance.

Some people are afraid of automating these things, thinking “What if the money isn’t there?” However, wasting time juggling these kinds of details helps ensure your attention is NOT on enrolling new students, which is the real way for the money to be there. Shift your energy away from repetitive administrative tasks and toward growing the school's profile in the community and supporting a healthy culture at the school. I can assure you that stressed out administrators do NOT improve the culture for staff or students.

Tuition Collections & Tracking

Once you set up a clear sliding scale system and have a workgroup to share the responsibility of your ALC’s financial stability, you’ll need to set up a system for collecting and tracking tuition payments. There are several services that can be used for this process. The key is finding one you can navigate easily, is reasonably affordable, and can streamline many of your financial/administrative processes.

It may take some time to set these things up, but the initial investment will definitely pay off quickly. The service can eliminate the need to manually track who has paid and who has not, finding parents and asking them for checks, making never-ending trips to the bank to deposit checks, and manually updating your books.

(Member Access) TUTORIAL: QUICKBOOKS PAYMENTS: Customers, Online Invoices/Payments, and Recurring Transactions

Automatic Recurring Invoices

(Member Access) TUTORIAL: QUICKBOOKS PAYMENTS: Customers, Online Invoices/Payments, and Recurring Transactions