Education and training
An education business is paid in advance and delivers over months, which makes its cash position look better than its profit and its profit harder to read than its cash. Enrolment arrives in waves, instructors are paid through the term, and a cohort that does not fill still has to run. We bring term-level and program-level finance to private schools, training providers, tutoring centres, language schools and course businesses across British Columbia, working alongside their CPA and within the rules of their regulator.
How the money works
- Tuition is often collected before the term and earned over it, so deferred revenue has to be tracked or the business spends money it has not earned
- Revenue per seat and seats filled per cohort decide profit, and a cohort that runs below its break-even enrolment loses money for the whole term
- Instructor cost is the largest expense and is committed before enrolment is known
- Marketing spend per enrolment is high and varies sharply by program and by channel
The moves we make
- An enrolment forecast by program and by intake, with break-even seats per cohort and a go or no-go rule
- Deferred revenue tracking and a cash forecast that separates cash received from revenue earned
- Contribution per program after instructor cost, materials and marketing cost per enrolment
- Instructor scheduling and contracting tied to the enrolment forecast rather than to the calendar
Where cash and margin leak
Margin leaks in cohorts that run below break-even because the schedule was set before enrolment, in instructor contracts that pay for full classes regardless of fill, in discounts and scholarships given without a budget, in marketing spent on programs that do not fill, and in refunds that were not planned for.
Cash leaks in the illusion of tuition collected up front. A business that spends September's tuition in September has nothing to pay instructors in November. Deferred revenue is a liability, and the cash behind it has to be managed as if it were already spent.
The numbers to watch every week
Enrolments and applications by program and intake against target. Seats filled against break-even by cohort. Marketing cost per enquiry and per enrolment by channel. Deferred revenue balance and the cash set against it. Instructor hours committed against enrolment. Completion and continuation rates. Cash against the term's remaining instructor and facility cost.
Reviewed weekly in the enrolment season and monthly through the term, these tell an operator which programs to run, which to cancel and how much to spend to fill the next intake.
How pricing works in education and training
Tuition is set from the cost to deliver a cohort, which is instructor time, facility, materials and marketing, divided by a realistic enrolment, plus a margin. The common error is dividing by the maximum class size. Pricing is then shaped by the market, by regulated limits where they exist and by the value of the outcome to the student.
Payment plans, deposits and early enrolment pricing affect cash more than they affect revenue, and they belong in the model. We build program-level pricing and contribution, and we set the enrolment threshold at which each cohort runs.
Questions from education and training owners
How do we account for tuition paid up front?
As deferred revenue, recognised over the term as the teaching is delivered, with your CPA setting the policy. In management reporting we show both the cash and the earned revenue, and we set aside the cash needed to deliver what has been paid for.
When should we cancel a cohort that has not filled?
At the break-even enrolment, set in advance for each program from its instructor, facility and materials cost, and reviewed at a fixed date before the start. A rule set in advance removes the argument. The enrolment forecast shows which cohorts are at risk early enough to push marketing or merge them.
Can you help with the regulator's financial requirements?
We prepare the financial information in the format the regulator asks for and keep the reporting consistent with your year-end statements. Compliance with the regulator's rules is for you and your CPA. We make sure the numbers are ready and right.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.