There are three letters that best describe the state of higher education in the U.S. amid the pandemic: T-B-D.

Colleges and universities, currently juggling the reality of empty campuses and classes held via video conference, are turning their attention toward the upcoming academic year. Many moving parts remain uncertain, however, thwarting educators from being able to definitively predict cash flows.

As the first round of deposits for fall semesters fast approaches, how will the higher education system adjust its pricing strategies, maintain affordability for struggling families and promote its own cash flow viability (that is sure to be disrupted by changing billing structures and lower enrollment rates)?

In a recent conversation with Karen Webster, Flywire CEO Mike Massaro discussed the unique predicaments that make cash flow management and forecasting in the time of the coronavirus an immense challenge for the higher education system. And they’re not alone; universities, as well as companies in other verticals like healthcare and travel, must embrace flexibility in their customers’ payment habits, and their own revenue streams.

Preparing For Multiple Scenarios

The cash flow implications on universities and colleges as a result of digital learning will continue to become more pronounced as the higher education system begins to develop a strategy for the upcoming semester. But as entities prepare to receive deposits from students, the challenge lies in the unpredictable nature of what’s ahead.

Those strategies, said Massaro, will look different for everyone. Decisions on whether to have students return to campus or remain in a remote education environment will largely depend on the geographic location of schools and the respective governmental policies.

As a result, the picture of cash flow remains complicated, too.

“COVID-19 is causing issues both for the cost structure of running an educational system, and on the families who are looking to send their kids off to study,” Massaro said, adding that schools must prepare for an array of scenarios based on possible student enrollment declines or a rise in students unable to make tuition payments. “There is a huge disconnect between some high-end universities with tens of billions of dollars in endowment, and the state universities and colleges that could be in very different financial situations. It’s not one-size-fits-all.”

Adjusting their approach to affordability will mean universities and colleges may consider expanded and more flexible payment plans, for instance. But, Massaro noted, the digital classroom doesn’t cut expenses for these schools as much as it might seem, so they’ll have to adjust cash flow strategies as a result of changing capital in-flows.

An Interconnected Ecosystem

The higher education ecosystem isn’t the only vertical exploring how to manage these fluctuating payment and cash flows. Similar challenges have emerged in industries like travel and healthcare, although with unique reasons for each.

“Every industry has to look at what their own recovery trajectory looks like,” said Massaro. “It could be two months for one industry, and it could be four months for another based on seasonality.”

In healthcare, for example, one of the largest impacts on revenue has been a dramatic decline in elective surgeries. While there is evidence that these procedures are gradually beginning again, providers’ financial forecasts will have to take into account a wide range of scenarios based on safety and compliance requirements in the months ahead.

The travel sector, meanwhile, sees its revenue recovery forecasts largely depend on geography and changing policies within individual travel providers.

Compounding these complexities is the fact that the revenue streams within these verticals and others are largely interconnected. The travel industry will be impacted by students’ ability to travel across state and even country lines to attend school. Restaurants will also be greatly affected by consumers’ ability to travel or access food services on university campuses and hospitals.

“These are not isolated industries,” noted Massaro. “They are interconnected in a staggering way.”

Long-Term Flexibility

Consumer payment patterns are the drivers of any organization’s cash flow management and financial planning strategy — but with consumer behavior impossible to predict today, entities in all verticals must remain flexible.

Development of flexible business models is key, with educators exploring a potential “new normal” of a hybrid physical-digital approach to teaching, and travel providers developing virtual adventure experiences to engage consumers.

Adopting payment technologies to react to these new models’ revenue changes will be essential, too. Universities need to develop flexible payment plans and must embrace tools to react to changing cost structures. With student attendance and enrollment, elective surgeries and consumer travel volumes potentially not returning to pre-pandemic levels for months or even years to come, higher education, healthcare and travel providers all need financial technologies to manage the impact on revenues. Flywire itself recently published a report on university enrollment and retention.

Amid this disruption, financial hardships raise the potential for growing chargeback volumes, default rates and refund demands, which could have long-lasting effects on how companies mitigate their customers’ financial risks and maintain loyalty.

“This is going to cause people to pause and look at these policies long term,” Massaro predicted. “This has hit so many geographies and industries that this could be the first test in a long time of the responsibility of financial transactions.”