Graham Cooper, our Head of Education, looks at the steps schools can take to get to the heart of successful budgeting. This article was originally published in Academy Today on 8 June and can be find here: https://academytoday.co.uk/Article/better-budgeting-how-can-schools-control-the-purse-strings
The pressure on academy trusts to maximise their budgets and reduce expenditure shows no signs of easing. And with the need to provide the DfE with three-year rather than 12-month forecasts from 30th July 2018, it is more important than ever for trusts to be able to make accurate financial predictions.
This can be a challenge when managing long-term budgets across multiple schools. In an ever-changing sector such as education, it may not always be possible to make exact predictions on spending or identify where savings can be made.
So, what can trusts do to make it easier to forecast their finances accurately and unearth potential savings?
The facts in the palm of your hand
Education institutions, like any organisation, need flexible financial systems and processes in place that are simple to manage and responsive to change. Fragmented systems and reporting methods make it incredibly difficult to piece together a real-time figure on spending across an academy group.
Academies are at the centre of a complex web of suppliers, customers, staff, equipment and maintenance. Without up-to-date information across all these elements, it’s virtually impossible to put together longer-term forecasts.
With a clear view of the current financial position of schools across the group, you will be in a better position to be able to identify issues before they become a problem and save valuable time in finding an appropriate solution.
It is important to ascertain the areas of spending that are having the greatest impact on pupils’ achievement in order to maximise budgets and identify where savings can be made.
A good starting point is to review the amount of spend on areas such as teaching resources, staff training and recruitment costs. You may be able to identify savings or improvements that won’t impact the core functions of your school.
Knowing that you have the most up-to-date information will give you the insight you need to make plans in the event of any changes in funding, delivery of the curriculum or significant differences in pupil numbers.
Making financial data relevant to all
Another way to help ensure financial sustainability is to make financial matters relevant to all members of the trust and involve them in decision-making.
There are tools available that enable financial information to be displayed at a glance. Using visually appealing bar charts, pie charts and diagrams is an effective way to enable figures to be instantly interpreted so that informed decisions can be made on financial matters.
Taking this approach means that even the most number-phobe department head can see in an instant how they are performing financially against targets and adjust spend accordingly to ensure the whole trust is working together to keep things on track.
Group-wide procurement can deliver significant savings, but when schools are located across a wide area, ensuring there is a collaborative approach to purchasing can be challenging.
One way to address this is to ensure contracts are regularly audited. This can help schools to join forces and highlight opportunities to combine tendering.
For example, there may be an opportunity to co-ordinate back office functions to enable schools to operate more efficiently. Potential savings could be made from implementing common purchasing strategies for recruitment, catering, technology, software licences and equipment too. Extracting this kind of information from schools across your trust can help to eradicate duplication of resources and effort.
Sadly, none of us have a crystal ball so predicting the future is not a straightforward task. But by knowing exactly where the schools in your trust stand financially at any given moment, you can take a positive step towards keeping control of the purse strings and ensuring your financial forecasts are on point.
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