Proven Practices for Effective Financial Decision Making

Financial health and quality programming go hand-in-hand. It is not possible to operate an effective school, support teachers and managers, and invest in your education business without being strong financially. In our experience, there are four minimum practices you should follow to make quick financial decisions regarding your early education company.

At A Minimum...

1. Outsource financial statement preparation.
   Few educational business owners have a background in accounting, so invest in a bookkeeper or CPA to produce regular financial statements for your company.
   

2. Produce timely information.
   You should receive your financial statements within 1-2 weeks following the end of the period. The world changes too quickly for it to do you any good later!
   

3. Track 3 things each week.
   There are three things you should have at your fingertips to make decisions about your business on a weekly basis. Most of this information can be gained from a combination of your weekly billing and payroll system including...
   
   1. Revenue: What money did you earn? What can you count on to come into your bank account? Are you earning enough to cover your expenses?

   2. Occupancy: How full is your building? Where do you have room? Can you create more revenue in your building by moving classrooms around?

   4. Salary Costs: What are you spending on staff? Are you managing their time efficiently?
   

4. Generate 13 four-week financial statements instead of monthly.
   It can be a challenge to produce completely accurate monthly financial statements due to the complexity of calculating staff costs and accounts receivable in the middle of a tuition week. We find it much more consistent and useful to produce 13 financial statements that run a four-week course. Your bank will end your statements on a four-week basis if you ask, and your production resource will easily manage this timetable.
   

Use The Information

None of the above matters if the information is not used to make better operating decisions. Use our Framework financial benchmarking tool to compare your a current expenses with the industry benchmark for a company of your size with your tuition rate structure and know what industry standards are in each category. Then, share and discuss the information with your managers and key team members and make adjustments to more closely align your school for financial health.

If you want more information on ways to streamline your education business accounting practices, reach out to our Success Services Financial Coach Kristine Mehler at kmehler@hingeadvisors.com.

What practices do you employ to make effective financial decisions regarding your education business?