Cash management tool for Maryland Montessori Learning Centre, Agona Swedru
Date
2018-04
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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.
Description
Applied project submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2018
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Applied project
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Keywords
Maryland Montessori Learning Centre, cash management, school