Over the last few years there have been some changes to the RTO landscape that have significantly impacted cash flow. It is a problem for many businesses in the Australian market, particularly RTOs that have been operational for some time.

Cash flow is the movement or flow of money in and out of a business. For a training business, the inflows are from student fees and the outflows are staff and suppliers. On the outgoing side, it is business as usual; RTOs like most businesses, are typically paying suppliers within 30 days and paying staff wages as they are earned. However, it is on the incoming side that RTOs have begun to experience considerable pain.

The RTO sector had a good cash flow landscape, primarily from upfront or early invoicing and of tuition fees and the subsequent early collection of those fees. In the big picture of cash flow, generally speaking the funds from the students came in early in the business cycle and the business had the cash in the bank to subsequently pay staff and suppliers.

Now, the sector has been hit by:

  1. Restrictions on the upfront collection of fees to a limit of $1,500 (per student)
  2. Reduced Government assistance on training and courses

Naturally, the changes listed above, along with a downturn in enrolments and other economic factors, have substantially reduced the amount of dollars coming in the door, along with the timing of these incoming payments.

If you are having difficulties dealing with the new financial landscape, this is where we can help.

We can assist you to carry out accurate forecasting for your business, so you can better understand your cash flow and identify any potential problems.

Importantly, if there are problems looming, we can look into solutions, such as systems improvements, invoice finance, business structuring, etc.

As specialists in the RTO sector, we have a wealth of experience dealing with the unique cash flow issues faced by the sector. We regularly examine the cash flow of both existing and new RTO businesses and have our finger on the pulse of solutions to ease cash flow pain.

If you’d like to speak to someone about cash flow, or any financial concerns, please don’t hesitate to contact us.

This article first appeared in VELG’s eNews Bulletin, on 26  October, 2018.