CASH MANAGEMENT TOOL FOR MARYLAND MONTESSORI LEARNING CENTRE, AGONA SWEDRU

ABSTRACT Maryland Montessori is a school established to give its students a unique learning experience. Equipped with modern infrastructure and highly dedicated teachers, the school has risen to becoming one of the most preferred in Agona Swedru Despite its successes, the school still has to deal with some problems as is the case of many other small enterprises. One of such is poor cash management. With the recurrence of late payments from parents for feeding fees and cash lying idle in the bank for the most part, Maryland is faced with constant cash shortages. The school deals with two main cash flows; tuition fee payments at the beginning of each term and feeding fee payments daily. Literature reviewed proved a negative correlation between profitability and poor cash management. Based on research into cash management models, a tool using the Stone model was developed for the tuition fees and one using the Baumol model for feeding fees. These models calculate the optimal cash balance the school is to hold to cater for expenditure while preventing any cash shortages or surpluses. In addressing the problem of late cash payments, a discount model was generated for the school. In addition, a payment model that charges debtors an additional fee was set to induce parents to make timely payments. In order to make the discounts more effective, payment plans were proposed to shift from a daily to weekly basis. With a more organized cash collection strategy through implementing discounts and follow-up strategies, Maryland can expect a great reduction in the incidence of late payments from parents. Furthermore, with measures in place to encourage investment as well, Maryland will reap returns which could lead to further development in the school.