Pub. 1 2011-2012 Issue 2

VS Budget Cash Flow By Brad Taylor, Chief Financial Officer | Academica West W hen given the chance to meet with the boards of new or prospective charter schools, one of the key points that they want to learn more about, and with good reason, is their budget. They often ask, “What’s the one area of the budget we need to really focus on?” I quickly answer, “Oh, it’s not the budget that will get you; it’s your cash flow.” Often, they looked puzzled, so I expound on the statement. “The first day the state gives you any funding for the fiscal year is the last business day of July, and then you are only given approximately one-twelfth of your annual anticipated state funding.” Normally, they nod in confirmation, although it often appears this is the first they are hearing about such an arrangement. I continue, “The first day of school is in August, right?” They agree. “So, how are you going to provide, on the first day of school, your students and faculty with desks, copiers, computers, textbooks, library books, pencils, pens, paper, and various building supplies, while still ensuring there is sufficient money in the bank to cover all opera- tional expenses in August, including teachers’ and administra- tion salaries, building payments, utilities, janitorial services, and other purchased services, such as garbage pickup and lawn maintenance?” At this point, many individuals begin to wonder if they really volunteered for this rodeo, but alas, there is hope for even the most desperate of board members. In order to survive in its first year, and thrive in subsequent years, a charter school should follow the ABCs of cash flow management. A nticipate your receivables. This is important in the first few months of each school year, but especially important in the first school year. Many of the large dollar purchases mentioned above occur after the beginning of the fiscal year, but before the students begin classes. When these purchases are scheduled to happen, the charter school’s financial team and the board of directors should make sure that the payment of these bills fits within the school’s cash flow. They should know the vendor’s payment terms and strive to meet them. When the total outflow of these purchases is expected to strain the cash flow, the school should have an open dialogue with the vendors to arrange a payment schedule that fits within the monthly allotment of cash received from the state. Many of the schools I have worked with have had great success in extend- ing payment terms or negotiating a payment schedule without incurring unnecessary fees or interest. When a five- or six-figure sale is on the line, many companies will become more lenient on the payment terms in order to close the deal. continued on page 24... * We currently have an after-school program for cooking and sewing. * We incorporate life-skills into the cooking curriculum. Learning about food, nutrition, manners, cleanliness, kitchen rules, etc. * Sewing classes focus on beginning and intermediate sewing skills, creativity, understanding pattern and fabric design. * We teach a full program of sewing and cooking classes in our school starting ages 5-14. * Franchises are now available for interested parties. www.learntocookandsew.com Let us help you with your Life Skills credit requirement! We can develop an in-school program for your students, bringing our program to you!