Cash Reserves and Runway: How Many Days Does Your School Have?

Ask a school bursar how much cash they have, and you'll get a number. Ask them how many days of operations that cash can actually cover, and you will usually get a pause, a rough guess, and then a caveat about term dates.

That pause matters. Because the number in your bank account and the number of days your school can operate are two very different things. And confusing them is one of the most common financial blind spots in education.

Cash balance is not the same as available reserves

Your bank balance on any given day includes money that's already spoken for. Fee deposits that you'll need to refund if families leave. Funds ring-fenced for capital projects. Grants received with conditions attached. Deferred income from fees paid in advance for next term.

Strip all of that out, and what is left is unrestricted, uncommitted cash. That is the actual reserve. In practice, it is typically 30-50% less than the headline bank balance, and sometimes much less.

One more thing to exclude: available credit. Some schools count an undrawn overdraft facility or revolving credit line as part of their liquidity buffer. It isn't. Credit has to be repaid with interest, often at the worst possible moment, and lenders can reduce or withdraw facilities when your financial position deteriorates — precisely when you most need them. Reserves are cash you own. Credit is cash you're borrowing. The two are not interchangeable.

A school with $2.4 million in the bank sounds healthy. But if $800,000 is advance fees for next term, $400,000 is earmarked for a roof replacement, and $200,000 is refundable deposits, you've actually got $1 million of available reserves. That changes the picture entirely.

How to calculate your operating runway

The calculation itself is straightforward. Take your unrestricted, uncommitted cash reserves. Divide by your average daily operating cost. The result is your runway in days.

Average daily operating cost = total annual operating expenditure divided by 365. Not by term days. Not by teaching days. Your school incurs costs every day of the year -- staff are employed year-round, utilities run year-round, loan repayments don't pause for half-term.

So if your annual operating expenditure is $8 million, your daily cost is roughly $21,900. If your available reserves are $1 million, you've got about 46 days of runway.

Forty-six days. Less than seven weeks. That's the gap between where you are today and a point where you can't meet payroll without new income arriving.

Why 90 days is the minimum

The 90-day threshold isn't arbitrary. It reflects the practical reality of school cash flow. Fee income arrives in lumps -- typically at the start of each term. But expenditure is continuous. Salaries go out monthly. Utilities go out monthly. Supplier invoices arrive regardless of whether fees have landed.

Ninety days gives you enough buffer to absorb a bad month. A group of families withdrawing unexpectedly. A major repair that can't wait. A delayed grant payment. Below 90 days, you're running tight enough that any single unexpected event could force you into short-term borrowing or emergency cost-cutting.

Below 60 days, you're in territory where the board should be actively involved in cash management. Below 30 days, you're in crisis territory whether you feel like it or not.

The hidden drains on cash reserves

Even schools that track their reserves properly can get caught out by obligations that don't show up clearly on a monthly management report.

Capital expenditure commitments

You've approved a building project. The contractor invoice hasn't arrived yet. But the commitment exists. If you're counting that cash as "available," you're overstating your reserves. Any approved capex that hasn't yet been paid needs to come off your available figure.

Term-date cash flow cycles

Schools have a unique cash flow shape. Big inflows at the start of each term. Steady outflows throughout. This means your reserve position changes dramatically depending on when you measure it. Check your reserves on September 10th after fees land, and you'll feel great. Check them on November 28th, and you might feel very different. The right approach is to measure at the low point of each cycle, not the high point.

Deposit refund liabilities

Many schools hold registration deposits or enrolment deposits. These feel like your money, but they're contingent liabilities. If a family leaves, you owe that deposit back (subject to your terms). A school with 600 families and $1,500 deposits is sitting on $900,000 of contingent refund liability. In practice, not everyone will leave at once. But the obligation is real, and it should factor into your reserve calculation.

Pension and tax timing

Pension contributions and payroll tax obligations don't always leave your account on the same day as salaries. There can be a gap of days or weeks where the cash is in your account but already owed. If you check your balance during that gap, it's artificially inflated.

A practical walkthrough

Let's work through a composite example.

Starting bank balance: $3.1 million

Subtract:

• Advance fees received for next term: $1.2 million
• Approved capital works (contractor not yet invoiced): $350,000
• Ring-fenced bursary fund: $180,000
• Deposit refund liability (conservative estimate, 20% of total): $160,000
• Outstanding pension/payroll tax payment: $110,000

Available reserves: $1.1 million

Annual operating expenditure: $9.2 million

Daily operating cost: $25,205

Runway: 44 days

In a scenario like this, a board might be told they have a healthy cash position — and they would be wrong. Forty-four days of runway is not healthy. It is the number the board needed to see, not the headline balance.

What to do with the number

Once you know your runway in days, report it to your board every month. Not just the bank balance. The runway figure. Track it over 12 months so you can see the seasonal pattern and the trend.

If you're above 90 days, you're in a stable position. Keep monitoring. If you're between 60 and 90, start building a plan to improve it -- whether through tighter cost control, timing adjustments on capex, or enrolment growth. If you're below 60, your board needs to treat this as a priority item with a specific recovery plan and timeline.

The point is not to panic but to know, because schools that get into real financial trouble almost always had the data to see it coming. They just were not asking the right question.

Why 90 Days May Not Be Enough

The 90-day threshold is a useful floor, not a target. It reflects a minimum standard of stability rather than a resilient position, and there are good reasons to aim higher, particularly for schools with high fixed-cost structures or exposure to volatile markets.

The COVID-19 period exposed how quickly that floor can become insufficient. Schools that lost fee income due to closures, deferments, or family departures found that 90 days of reserves was consumed far faster than anticipated when income simply stopped while payroll, debt service, and essential maintenance continued. Many schools needed 6-12 months of operational cover to navigate the period without forced redundancies or structural damage, and some that entered the pandemic with what looked like healthy reserves discovered they were far more exposed than their runway figures suggested.

The macro environment since then has introduced its own pressures. Energy costs roughly doubled in many markets between 2021 and 2023, adding hundreds of thousands to annual operating expenditure at schools with older buildings and high energy dependency. Geopolitical disruption has affected international school markets through corporate mobility changes, currency movements, and in some cases direct enrolment shocks. A school that modelled its reserves on pre-2020 assumptions about cost stability may find those assumptions do not hold.

For schools in volatile markets, with significant borrowing, with high fixed-cost structures such as boarding operations or large campuses, or with enrolment dependency on a small number of large corporate accounts, 90 days is the bare minimum. A more resilient target is 150-180 days. That provides meaningful buffer against a sustained disruption rather than just an unexpected quarter, and it buys the time needed to make considered decisions rather than reactive ones when circumstances change.