Warnings to wannabee pilots in the Aviation Mags
Join Date: Nov 2000
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If people want to take that risk in exchange for lower-cost flying, why shouldn't they?
... but it would be nice if they would sign up, in advance, to promise that when they have lost their money they won't come on here and whine about it.
Join Date: Jan 2008
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Sorry to point out the obvious.....
Regardless of whether it is a flying school or not, investing any substantial sum of money takes some prudence.
As a director of a company cashflow forecasting and money in the bank offer many more benefits other than "Interest Earned", for a start it gives visibility to the credit worthyness of a company which in turn allows a business' to obtain and fund finance.
Flying is affected by the seasonal variation in the weather. Paying up front for hours is a contract that a Bank will respect and identify as revenue. Effectively forcing for people to pay as and when they fly gives any business a problem that they can only provide finance instituations a forecast based upon the last years figures, as such only a percentage of the revenue forecast will be accepted because there are no guarantees (contracts).
As with all things in life there is a risk when paying up front, these risks can be mitigated to an extent by not investing more than your willing to lose and by doing your research in where your investing (Ask around, credit checks, speak to the finance dept etc). Looking for a club that earns its revenue not only from the flying e.g. maintenance and you will probably find a club with a more stable footing but the key is research.
Security comes at a cost, that cost is the higher fees you have to pay. You cannot have the best of both worlds by having cheaper fees when not providing a contract that can be substantiated for forecasting purposes - this works in all aspects of business not just aviation.
Regardless of whether it is a flying school or not, investing any substantial sum of money takes some prudence.
As a director of a company cashflow forecasting and money in the bank offer many more benefits other than "Interest Earned", for a start it gives visibility to the credit worthyness of a company which in turn allows a business' to obtain and fund finance.
Flying is affected by the seasonal variation in the weather. Paying up front for hours is a contract that a Bank will respect and identify as revenue. Effectively forcing for people to pay as and when they fly gives any business a problem that they can only provide finance instituations a forecast based upon the last years figures, as such only a percentage of the revenue forecast will be accepted because there are no guarantees (contracts).
As with all things in life there is a risk when paying up front, these risks can be mitigated to an extent by not investing more than your willing to lose and by doing your research in where your investing (Ask around, credit checks, speak to the finance dept etc). Looking for a club that earns its revenue not only from the flying e.g. maintenance and you will probably find a club with a more stable footing but the key is research.
Security comes at a cost, that cost is the higher fees you have to pay. You cannot have the best of both worlds by having cheaper fees when not providing a contract that can be substantiated for forecasting purposes - this works in all aspects of business not just aviation.
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As a director of a company cashflow forecasting and money in the bank offer many more benefits other than "Interest Earned", for a start it gives visibility to the credit worthyness of a company which in turn allows a business' to obtain and fund finance.
When you've been paid for something in advance (my company charges some of its clients in advance to save hassle with worrying about credit) you've got some cash but you haven't got any extra money - an honest accounting will show a liability for the same amount in your accounts which you should make equally as visible as the cash to anyone you're trying to get finance from.
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Only if you don't account for it honestly.
The point is that entering into a contract regardless of if the contract is pre or post paid gives any finance institution hard evidence of revenues expected/actual so that any application may be considered. This allows much more leeway than forecasting based upon predicted factors.
You are observent in that you do not get extra CASH or MONEY however you do get a financial picture allowing for more informed budgetary considerations allowing financing for larger investments over time and expunging the possibilites of expenditure outside of operating capabilities (thus averting insolvency).
Let us not get bogged down in the particulars - the point is that the pre-paid hours can work for both parties and as such should not be precluded due to bad management of a select few businesses. As I originally said before lodging any large sum with any organisation do your research beforehand.
