School Business Affairs September 2019

12 SEPTEMBER 2019 | SCHOOL BUSINESS AFFAIRS asbointl.org FINANCE AND ACCOUNTING Understanding the Value of Cash Flow A comprehensive cash flow analysis can ensure that all of a district’s liabilities are being properly funded. By Tom Lanzara S chool business officials need to know the finan- cial condition of the district and its future, so they should have a good grasp of how revenues and expenditures flow throughout the course of the fiscal year and their role in the process. Additionally, understanding cash flow as a whole can help SBOs do the following: • Ensure that all liabilities are met. • Maintain liquidity. • Determine whether short-term borrowing is necessary. • Optimize investment potential. • Provide continuity in the business office. • Keep the administration and board of education informed. Knowing when the district receives its county tax dis- tributions and when bills are due is obviously important, but the ability to dive deeper each month can help deter- mine when a district may need to borrow funds or when it should invest to help close gaps in a budget. Cash Flow Analysis An SBO who fails to fund payroll or misses bills from accounts payable could be out of a job. A delinquent debt service payment could downgrade a district’s credit rating. The district can avoid such scenarios by managing cash flow effectively. One approach is a thorough cash flow analysis that is liability-driven to ensure that all of the district’s liabilities are being properly funded. After the district’s budget has been approved, the dis- trict designates the dates and amounts to be expended LORNA/STOCK.ADOBE.COM

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