When the Bell Rings – 4a
Political tensions in the country, a couple of strikes and a recent series of power-cuts were playing on the mind of Dr Dahlia Potts, the School Principal as she drove into the car park following a hurriedly organised meeting about security with the Indian Ambassador. While external events were out of her control, she was still responsible for the school. While it was usually an oasis of calm just outside the chaotic city, the situation was troubling. However, this morning she faced a different challenge: a finance issue.
Dahlia went straight to see Marcia Proust, the Business Manager. On her way, she noticed a queue of parents outside the Cashier’s office which struck her as strange.
Inside Marcia’s office, the two reviewed the draft Finance Report for the upcoming committee meeting. Enrolment was steady at 750 students, but fee collection lagged behind expectations. Invoices for Semester 1 had been sent out on 1 August, yet by 15 September, only 92% had been paid.
Some delays were familiar — one large company always paid late, covering 30 students — but it was the number of individual parents behind in payments that was of more concern. Thirty families hadn’t settled their accounts. Historically, the late payment rate at this time of year had been 1–2%, but rose to 5% last year. Now, it was higher again.
Marcia assured Dahlia that the staff member responsible for Accounts Receivables was trustworthy and followed the standard operating procedure (SOP) for the tuition fees schedule policy. Marcia also added that she had a good relationship with the bank though had not spoken to the manager since troubles in the country had begun two months ago. Dahlia asked about the queue outside the Cashier’s office and Marcia admitted that it was unusual. Dahlia realised that action was needed and Marcia agreed:
- Send reminders to parents.
- Contact the company to confirm payment was imminent.
- Re-engage with the bank.
They then completed and submitted the Finance Committee report.
However, only hours before the Finance Committee meeting a few days later, Dahlia began to realise that there was more to this issue than she and Marcia had first thought. Did she know what was going on? Had Marcia prepared financial projections? Was their plan too weak? Dahlia knew that she was responsible and kicked herself for not being more alert to the issue. She also wondered whether her expectations of Marcia were too low.
For Discussion
Do you agree with Dahlia’s final assessment?
When the Bell Rings – 4b
The Finance Committee convened under its new Chair, Bryan Pleet, a senior executive at a global accounting firm. Bryan wasted no time. He first asked Dahlia for an update.
Dahlia and Marcia reported that fees from 30 company-sponsored students and 10 individual students had been paid, but the fees of the remaining 20 students had not yet been paid despite reminders being sent.
Bryan’s questions were pointed and practical. He began with last year’s actions before turning to the present situation:
- “What analysis was done last year, and why weren’t stronger measures introduced?”
- “When was the last contact with the bank, and what was discussed?”
- “How robust are our Accounts Receivable controls?”
- “How well does leadership really know the finance staff?”
- “Why are so many parents paying in cash—and are online options available?”
- “What does our cash flow look like for the next three months if payments continue to lag?”
Dahlia knew his points were valid. Bryan and the committee acknowledged that the actions Dahlia had taken were appropriate but felt that more could have been done last year under the former Principal and more needed to be done now.
Bryan announced immediate measures:
- Review internal controls and reconciliation of Accounts Receivable.
- Meet with the bank manager and obtain written confirmation of any systemic issues.
- Explore backup options (secondary bank account and/or temporary arrangements.)
- Prepare a short-term cash flow forecast with stress-tests.
- Issue segmented reminders to late-paying parents, outlining clear consequences.
- Identify contingency plans (delaying non-essential expenses, drawing on reserves, negotiating bank overdraft).
He added that longer-term solutions would also be explored:
- Survey parents on their preferred method of payment.
- Consider technological solutions to make payments and the tracking thereof easier and more secure.
- Request the Policy Committee join the Finance Committee to review and discuss the policy on the tuition payments schedule.
Before closing , Bryan outlined his expectations for the next meeting: a report on last year, a reconciliation statement, trend analysis, bank confirmation, updated cash flow forecast, and detailed contingency plans. He also noted that tuition policy and payment technology would be key agenda items. He offered his support to Dahlia or Marcia and encouraged them to call if they needed help.
For Dahlia, the message was clear: she would need to work more closely with Marcia—not just to resolve this issue, but to strengthen the organisation’s overall financial discipline.
For Discussion
Did Bryan take the right steps? Could it have been done in a different way? What do you think Dahlia should do, other than complete the concrete steps listed?