Manage your cashflow:
Your focus needs to be on your businesses cash more so than revenue or profit. Attention should be your RTO’s statement of cash flow and income statement so you can keep an eye what is moving in and out of your bank accounts. Review it more frequently than usual, either daily or weekly. It is important to retain your existing students by adjusting your delivery to prevent attrition within your course offerings. In doing so you will ensure course fees are received as forecasted and you will be able to claim government subsidies as planned to realise the full allocation of your funding agreements. RTO delivery models at this stage of the pandemic should incorporate online or distance learning to account for ongoing restrictions and COVID safety protocols required to prevent the spread of the virus.
A big lesson that the pandemic has taught VET providers is to diversify your income streams, so it is important for RTOs to ensure they are not reliant on just one part of the student market e.g. international. RTOs should also continue marketing for new enrolments or business, to ensure their sales pipeline keeps growing. Your sales strategy should be focused on existing and new markets. Many industries are now increasingly focused on upskilling or retraining workers to address looming skills shortages and your RTO should be engaging with local employers about the current situation.
Additionally, look at the possibility of increasing the price of your products and services to bring in more revenue. Consider limiting payment methods to credit cards or cash in advance for your RTOs products and services. Review your credit terms to customers and examine payment plans due to avoid the risk of delayed or missed payments. The payment terms you give your customers should match the ones you accept from your suppliers so you have balance between cash coming in and cash going out. Look at your accounts payable and receivable as a priority. Talk to your suppliers and ask if you can negotiate time to pay what you owe them if need be. Review outstanding invoices from your debtors. Contact them to see if you can arrange payment of what is due in a reasonable timeframe.
Labour costs are typically a significant expense for RTO’s as wages are a large cost directly attributed to your products and services. Some ways to gain efficiencies in your delivery can include:
- Offer virtual face to face classes and increase class sizes where practical. Be mindful though not to overload your trainers with excessive caseloads of students.
- Save time and cost of assessors by collecting video evidence of practical assessments or third party reports from workplace supervisors if appropriate. Only adjust your practical classes if it meets performance evidence and assessment conditions requirements of units of competency.
- Reduce the number of casual or contract trainers you employ and better utilise your permanent trainers with effective timetabling.
- Invest in professional development for your delivery staff that builds their capability, it will pay off in the long run.
Other ways to reduce expenditure
- Look at your unprofitable courses and consider divesting from those markets.
- Consider reducing your marketing expenditure and look at digital methods that focus on organic reach requiring less financial investment.
- Look at your energy consumption e.g. heat, air conditioning, computers and printers etc. although this may have happened organically if you have moved your workforce to working from home arrangements.
- Consider new suppliers to reduce fixed and variable costs. Many businesses in the RTO supply chain are selling goods and services at a discounted rate currently and in some instances offering free products.
- Use technology to gain efficiencies (automation) or review technology not being used effectively.
Seek expert advice:
The advice provided in this article in our recommendations is general in nature and should not replace the expert advice you should obtain from the professionals such as your accountant, your bookkeeper or both. They are best placed to advise your RTO on how to manage your business through the pandemic and sustain your business in the future.