Seeing the school's cash position before term starts
How a school builds a clear view of its cash before a new term when its books produce no cash flow statement, from bank balances, fee ageing and bills.
By Achekam · · 5 min read · For Education businesses in South Africa, Nigeria, Kenya
The weeks before a school term are the tightest of the year for cash. Staff are paid for the holiday month, the textbook supplier wants settling before deliveries, the maintenance done over the break is invoiced, and the new term's fees have not yet arrived. The bursar's question to the head is always the same: will we get through to the point where fees come in?
A cash flow statement would help, but Achekam's books do not produce one. That is no obstacle to a sound answer: the pieces are all in the books, and a simple plan built from them is often more useful before term than a formal statement would be. This article shows a school, college or training centre how to assemble it.
No cash flow statement from the books
Achekam's own books produce management accounts: an income statement for any chosen period beside the period before, and a balance sheet at the period end, both added up from the school's own journals and exportable as PDF or CSV. They do not produce a cash flow statement.
Even if they did, a cash flow statement looks backwards: it explains where cash came from and went over a past period. Before term, the bursar needs to look forward, week by week, over the next couple of months. That is a cash plan, sometimes called a cash budget, and it is built rather than printed. ACCA explains why a business prepares a cash budget and how to build one from expected inflows and outflows, with a worked example, in its article on cash budgets.
Start from reconciled bank balances
Every cash plan starts with the cash you actually have, and that figure has to be right. Import the latest bank statements for every account the school uses: fees account, operating account, any savings or fundraising accounts. Achekam takes statements as PDF, CSV, Excel and several bank formats, and checks each import so that the opening balance plus movements equals the closing balance.
Then reconcile. Bank lines are matched by suggestion and a person accepts each match; lines not yet in the books become suggested journals a person approves. A reconciliation completes only when nothing is left unexplained. Only once that is done is the bank balance in the books a figure you can plan from.
Write down the reconciled balance of each account as at a fixed date, such as the Friday before you build the plan.
Fees expected in, from the ageing
Fee income arrives from two directions: what families already owe from earlier terms, and what the new term's invoices will bring.
For what is already owed, use the ageing. Receivables in Achekam are aged into 0-30, 31-60, 61-90, 91-120 and over 120 days, with overdue totals. Each band tells you something different about the weeks ahead:
- the 0-30 band is mostly recent invoices and is likely to come in soon;
- the 31-60 and 61-90 bands are families running behind, some of whom will pay at the start of term;
- the 91-120 and over-120 bands are the doubtful money. Plan on little of it.
Be conservative. It is far better to be pleasantly surprised in week three than to promise a supplier a payment date that fees do not reach.
For the new term, work out when invoices will go out and when families typically pay. Schools that offer instalment plans should spread the expected fees across the instalment dates rather than counting the whole term in week one; fee instalments and part payments explains how those plans are recorded.
Bills and payroll going out
The outflows are usually more predictable than the inflows.
Supplier bills. Supplier bills in Achekam are recorded line by line, and a bill entered without a purchase order waits for approval before it posts. List every bill due before the end of the planning period, with its due date. Bills can be paid in full or in parts from a chosen bank account, which gives you room to stage a large bill over two dates if the supplier agrees.
Orders not yet billed. Approved purchase orders count as committed spend against budgets. The textbook order approved last month is not yet a bill, but it will be. Include committed orders in the plan at the date you expect the bill.
Payroll. Each approved pay run has a payment schedule that can be downloaded as CSV. Use the last run's total as the base for each payroll date in the plan, and adjust for any new appointments or leavers.
Everything else. Loan repayments, rent, statutory payments and any fixed monthly debit orders from the bank statement.
A simple term cash plan
Put the pieces into a plan with one column per week, from the date of your bank balances to the end of the first month of term:
| Row | What goes in it |
|---|---|
| Opening cash | Reconciled bank balances, then each week's closing figure |
| Fees from earlier terms | From the ageing, conservatively |
| New-term fees | By invoice and instalment dates |
| Other income | Hall hire, uniform shop takings, grants |
| Payroll | From the payment schedule |
| Supplier bills | By due date |
| Committed orders | At the expected bill date |
| Other payments | Loans, rent, statutory payments |
| Closing cash | Opening plus income less payments |
Look for the lowest closing figure. That week is your pinch point, and it is the week to manage: ask a supplier for a later date, bring forward a fee reminder, or arrange cover with the bank before you need it.
Achekam can also hold a budget per account and period and compare it with actual figures from the ledger. Once the plan is set, put the main lines into the budget, so that each month's actuals show whether reality is running ahead or behind. Schools whose year has a quiet season can borrow ideas from planning cash through a low season.
Build the plan a month before term, update it every Friday until fees are in, and share the pinch-point week with the head and the chair of the finance committee.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
