Cash Flow Management

Cash Flow Management

Track cash inflows and outflows, monitor liquidity, and forecast cash positions for effective financial planning.

Time Required: 15-20 minutes for initial setup Module: Accounting, OpenEduCat Fees Permissions: Financial Manager, Accountant

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Table of Contents

1. Overview
2. Cash Flow Components
3. Monitor Current Cash Position
4. Cash Flow Analysis
5. Fee Collection Forecasting
6. Cash Flow Reporting
7. Treasury Management
8. Best Practices

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Overview

Effective cash flow management ensures educational institutions can:

• Meet payroll and operational obligations
• Plan for capital investments
• Manage fee collection cycles
• Handle seasonal cash variations
• Maintain appropriate reserves

Cash Flow Equation

Net Cash Flow = Cash Inflows - Cash Outflows

Where:
  Cash Inflows  = Fee Collections + Other Revenue + Loans/Grants
  Cash Outflows = Payroll + Operations + Capital Expenditure + Debt Service

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Cash Flow Components

Cash Inflows (Sources)

Category	Timing	Predictability
Tuition Fees	Term start	High
Registration Fees	Enrollment period	Medium
Examination Fees	Exam periods	High
Hostel Fees	Monthly/Term	High
Transport Fees	Monthly	High
Government Grants	Quarterly/Annual	Medium
Donations	Variable	Low
Interest Income	Monthly	High

Cash Outflows (Uses)

Category	Timing	Predictability
Salaries & Wages	Monthly	High
Utilities	Monthly	Medium
Supplies	Variable	Medium
Equipment	As needed	Low
Debt Payments	Monthly	High
Insurance	Annual/Quarterly	High
Maintenance	Variable	Medium
Scholarships	Term start	High

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Monitor Current Cash Position

Bank Account Dashboard

1. Go to Accounting > Dashboard
2. View bank account widgets showing:
   • Current balance
   • Incoming payments
   • Outgoing payments
   • Forecast balance

Real-Time Cash Position

Account Type	How to View	Information Shown
Bank Accounts	Accounting > Bank > Bank Accounts	Balance, last statement
Cash Registers	Accounting > Bank > Cash Registers	Cash on hand
Outstanding Receivables	Accounting > Customers > Invoices (Unpaid)	Expected collections
Outstanding Payables	Accounting > Vendors > Bills (Unpaid)	Expected payments

Daily Cash Report

1. Go to Accounting > Reporting > Cash Report
2. Select date range
3. View:
   • Opening balance
   • Receipts by category
   • Payments by category
   • Closing balance

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Cash Flow Analysis

Cash Flow Statement

Generate formal cash flow statement:

1. Go to Accounting > Reporting > Cash Flow Statement
2. Select reporting period
3. Report shows:

Operating Activities

Item	Source
Collections from students	Fee invoice payments
Collections from grants	Grant receivables
Payments to employees	Payroll entries
Payments to suppliers	Vendor bill payments
Interest received	Bank interest postings
Interest paid	Loan interest payments

Investing Activities

Item	Source
Purchase of equipment	Asset acquisitions
Sale of assets	Asset disposals
Investment purchases	Investment transactions

Financing Activities

Item	Source
Loan proceeds	Loan receipts
Loan repayments	Loan payment entries
Capital contributions	Equity transactions

Analyze Cash Flow Patterns

Seasonal Analysis

Educational institutions experience predictable cash patterns:

Period	Cash Flow Pattern
July-August	High inflow (new admissions)
September	Moderate (term fees)
October-November	Low (mid-term)
December	High outflow (year-end expenses)
January	Moderate inflow (spring term)
February-March	Low (mid-term)
April-May	High (exam fees, summer programs)
June	Low (summer break)

Trend Analysis

1. Export monthly cash flow data
2. Create trend charts showing:
   • Rolling 12-month average
   • Year-over-year comparison
   • Variance from budget

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Fee Collection Forecasting

Expected Fee Collections

Based on fee plans and due dates:

1. Go to OpenEduCat > Fees > Fee Plans
2. Filter by:
   • State: Running
   • Invoice Date: Future
3. Sum expected amounts by period

Collection Probability

Apply collection rates based on history:

Days Until Due	Collection Rate
Not yet due	95%
1-30 days overdue	70%
31-60 days overdue	50%
61-90 days overdue	30%
90+ days overdue	15%

Fee Collection Dashboard

Create custom dashboard showing:

Metric	Calculation
Total Invoiced (This Month)	Sum of posted invoices
Total Collected (This Month)	Sum of payments received
Collection Rate	Collected / Invoiced
Outstanding Balance	Unpaid invoice total
Forecast Collection	Outstanding x probability

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Cash Flow Reporting

Daily Cash Report

Section	Content
Opening Balance	Previous day closing
Fee Collections	Student payments received
Other Receipts	Grants, interest, other
Total Inflows	Sum of receipts
Salary Payments	Payroll disbursements
Vendor Payments	Bill payments
Other Payments	Miscellaneous outflows
Total Outflows	Sum of payments
Net Change	Inflows - Outflows
Closing Balance	Opening + Net Change

Weekly Cash Summary

Day	Opening	Inflows	Outflows	Closing
Monday	100,000	50,000	20,000	130,000
Tuesday	130,000	30,000	15,000	145,000
…	…	…	…	…
Week Total	100,000	200,000	100,000	200,000

Monthly Cash Flow Report

1. Go to Accounting > Reporting > Cash Flow Statement
2. Select monthly period
3. Compare:
   • Budget vs actual
   • This month vs last month
   • This month vs same month last year

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Treasury Management

Maintain Optimal Cash Levels

Minimum Cash Reserve

Calculate based on:

• Average monthly operating expenses
• Payroll obligations
• Emergency fund requirement

Formula:

Minimum Reserve = (Monthly Expenses x 2) + Emergency Fund

Maximum Cash Holding

Excess cash should be invested:

• Short-term deposits
• Money market funds
• Treasury instruments

Investment of Surplus Funds

When cash exceeds optimal level:

1. Calculate surplus
2. Determine investment horizon
3. Select appropriate instruments:

Horizon	Instruments
< 30 days	Savings account
30-90 days	Short-term deposits
90-365 days	Treasury bills, CDs
> 1 year	Bonds, long-term deposits

Credit Line Management

For cash shortfalls:

1. Identify Shortfall - Forecast shows negative balance
2. Assess Duration - How long until positive
3. Draw Credit - Use approved credit facility
4. Repay Promptly - When cash normalizes

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Cash Flow Forecasting

Short-Term Forecast (4 Weeks)

Based on:

• Posted invoices with due dates
• Scheduled bill payments
• Known recurring items
• Historical patterns

Week	Expected Inflows	Scheduled Outflows	Net Flow	Projected Balance
Week 1	100,000	80,000	20,000	120,000
Week 2	50,000	90,000	(40,000)	80,000
Week 3	200,000	85,000	115,000	195,000
Week 4	75,000	150,000	(75,000)	120,000

Medium-Term Forecast (12 Months)

Based on:

• Fee plan schedules
• Enrollment projections
• Budget allocations
• Seasonal patterns

Create Forecast

1. Export fee plan data with due dates
2. Export payroll and expense schedules
3. Create monthly projection:
   • Beginning balance
   • Expected fee collections
   • Other income
   • Planned expenses
   • Ending balance

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Best Practices

Daily Operations

1. Reconcile Daily - Match bank transactions daily
2. Monitor Collections - Track fee payment progress
3. Control Disbursements - Schedule payments strategically
4. Document Everything - Maintain clear audit trail

Weekly Review

1. Cash Position Report - Review weekly summary
2. Collection Follow-up - Address overdue accounts
3. Forecast Update - Adjust based on actuals
4. Variance Analysis - Investigate significant differences

Monthly Analysis

1. Cash Flow Statement - Prepare formal statement
2. Budget Comparison - Compare to cash budget
3. Trend Analysis - Review patterns
4. Forecast Refinement - Update rolling forecast

Annual Planning

1. Cash Budget - Prepare annual cash budget
2. Reserve Assessment - Evaluate adequacy
3. Investment Review - Optimize surplus deployment
4. Credit Facility - Ensure adequate access

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Metrics and KPIs

Liquidity Metrics

Metric	Formula	Target
Current Ratio	Current Assets / Current Liabilities	> 2.0
Quick Ratio	(Cash + Receivables) / Current Liabilities	> 1.5
Cash Ratio	Cash / Current Liabilities	> 0.5
Days Cash on Hand	Cash / (Annual Expenses / 365)	> 60 days

Collection Metrics

Metric	Formula	Target
Collection Rate	Collected / Invoiced	> 95%
Days Sales Outstanding	(Receivables / Revenue) x Days	< 30 days
Aging Ratio	Current / Total AR	> 80%

Cash Flow Metrics

Metric	Formula	Target
Operating Cash Flow Ratio	Operating Cash Flow / Current Liabilities	> 1.0
Cash Flow Coverage	Operating Cash Flow / Debt Service	> 1.25
Free Cash Flow	Operating Cash - Capital Expenditure	Positive

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Troubleshooting

Cash Position not updating

Solutions:

1. Complete bank reconciliation
2. Post pending journal entries
3. Refresh dashboard

Forecast inaccurate

Solutions:

1. Update fee collection probabilities
2. Review payment schedules
3. Account for seasonal variations
4. Include all cash sources

Cash shortfall approaching

Actions:

1. Accelerate fee collection efforts
2. Delay discretionary payments
3. Draw on credit facility
4. Communicate with stakeholders

Excess cash accumulating

Actions:

1. Review investment policy
2. Consider short-term investments
3. Prepay high-interest debt
4. Fund capital projects

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Related Topics

• Accounting Integration
• Budget Management
• Financial Reports
• Fee Collection
• Online Payments