As the school year nears, many must change the way they collect payments

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Schools are still figuring out how they will open this fall, with some districts providing online education while others try a hybrid approach of online and in-person instruction. This complicated structure also upends how schools handle fees and payments.

In a hybrid approach, some students attend in-person for a few days, then switch to online education while another group attends in-person — but a coronavirus outbreak could force the entire student body offline at a moment's notice. That means any payments tied to student activities, staffing and vendors can’t be reliably predicted.

“If you think about something like the back to school season: In previous years our team would go out to meet with the sports staff, the bus drivers and the teachers to talk about the credit union,” said Chris Conway, President and CEO of Educational Systems FCU, which has $1.2 billion in assets and 85,000 members, mostly in Maryland. “All of that is online now, for all of us and for them.”

Remote work has created different challenges depending on the type of institution. For hospitals, the cancellation of elective procedures, a rush of coronavirus patients with uncertain financing policies and reassigned staff have led to billing backlogs and delayed IT projects. Churches had their primary means of donations cut off, prompting a quick turn to digital collections. Restaurants have started using mobile point of sale apps in parking lots to accommodate take-out only restrictions.

Schools have challenges in payroll, activity fees and in the part of the back office that manages B2B payments.

For primary and secondary education, teachers who were accustomed to receiving checks in school were suddenly forced online, a relatively common but unfamiliar channel for school staff.

“The challenges of living in a global pandemic have moved my banking 100% online,” said Lauren Grey-Hawkins, the business and communications specialist for the Anne Arundel County Public Schools in Maryland, which serves 85,000 students in 128 schools, in an email. “I need to be able to access my account from anywhere and conduct my transactions.”

Teachers are also paid differently than many other industries, so there’s payroll adjustments. Some teachers are paid year-round, while others receive larger paychecks during the school year and are not paid during the summer. There’s been a larger push to direct deposit and other online payroll tools as a result, Conway said. “Staff usually got their summer checks by coming into a branch. They don’t want to do that now."

Schools also collect thousands of smaller payments, and make payments like any other business. Most of the smaller transactions are for activities or fundraisers, which are stubbornly cash-based.

Digital apps can help automate forms such as permission slips and medical clearance for sports, and tie those processes to fee payments. As the pandemic pushes activities such as music and art online, these transactions have also been going digital.

Educational Systems FCU has integrated with a digital banking platform from Finastra and the Allied Payment Network, a third-party app, to automate account-to-account and P2P payments via email. The credit union has formed what amounts to a Zelle or Venmo for education payments, using a more tailored system for messaging, transfers and group collections.

Payments can be tied to information about events or activities that have been moved online or offline, suspended or delayed, with refunds also possible. “You would normally send a check with your kid to school to pay for these kinds of things,” Conway said.

And much like any other business, school district accounting and billing offices have been forced online. For most businesses, this activity was primarily handled in centralized locations, even if the payments were digital.

Schools are no different, and face both payment challenges and a lack of visibility into revenue at a financially challenging time.

"As the new school year approaches, education systems are facing unprecedented financial challenges. Not only are the logistics of schooling during the pandemic significant, but they are also grappling with the considerable loss of revenue streams such as fundraising, sponsorships and after-school programs that drive cashflow,” said Darren Heffernan, president of midmarket for Trintech, which develops software enterprise software for retailers and education.

AI and automation can simplify school finances, particularly for accounts payable and receivable. Many of the same supply chain and procurement issues that retail businesses are facing also impact schools, which must order supplies, hire and pay contractors.

“They're able to then see that perhaps there are too many vendors being employed for a certain project, more competitive pricing can be sought or manual processes like bank reconciliations and cash management are taking more man hours each week than projected, where more value-add activities could be accomplished instead,” Heffernan said.

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