Despite receiving funding for the exceptional spending associated with COVID-19, the uncertainty and unexpected costs of the past two years have left many schools in a precarious financial position.
Last May, it was reported that while education had received £138 million worth of COVID-19 expenses, the Department for Education had rejected £42 million in claims.
The promise of additional funding, announced in the Chancellor’s Autumn Budget, was welcome news for the education sector, and should go some way to plugging the financial blackhole many schools, academies and trusts are now facing.
The £4.7 billion of investment could be just what’s needed to help them get back on a stronger footing, although the reality is that most school budgets remain tight and will remain so in the immediate future.
Develop robust financial processes
COVID-19 was a sobering reminder that we never know what is around the corner, and as school finance teams and business managers will know, budgets and projections often had to be re-written overnight.
This only makes the case for developing robust financial management processes to drive efficiencies more compelling. With the right tools, you’re able to set budgets and forecast quickly and accurately, and adapt them as income and expenditure fluctuates.
This is key to delivering value, and ensuring better opportunities and learning outcomes for pupils.
Adapt in line with growth
Unexpected events aren’t the only reason why academies and trusts should regularly review their financial management processes, of course.
Growth increases complexity and can make tasks such as reporting and ensuring compliance far more time-consuming, especially if budgets won’t allow the recruitment of more people in your team.
With visibility of the trust’s finances, staff can spot opportunities to make savings, share resources across academies and achieve economies of scale when procuring goods and services. They’re also able quickly to model a number of different scenarios, based on changes to spending and income.
It’s a journey we’ve been on at the Bosco Catholic Education Trust. When the trust was established in 2017, we quickly realised that our current systems weren’t geared up for the job anymore.
Switching to the Access Finance and Budgeting software allowed us to transform our accounting processes, with real-time budgeting and forecasting capabilities.
As well as keeping spending in check, it empowered us to work collaboratively with schools across the trust. The strength of these partnerships helps us to understand their needs better, so we can allocate resources strategically, which benefits both staff and pupils.
This way of working is only possible if finance teams use technology to complete essential but time-consuming tasks such as reporting.
The fact that we’re able to generate reports quickly and easily saves us a huge amount of time, and it’s something I know the trustees and governors really value.
Using the most up-to-date data contained within the system also provides assurances that reports are accurate and consistent. They have a clear view of what is happening, which informs and improves decision-making.
From my perspective, it enabled us to transition to proper financial accountability, which is essential for any trust, and something I was keen to establish as soon as possible.
Taking the pain out of auditing
The rise of Multi-Academy Trusts (MATs) over the past decade has, without a doubt, increased the focus on auditing, with stringent rules and regulations now in place that must be adhered to.
Academies are legally obliged to submit an annual audit to the ESFA by 31 December and have this published on the trust’s website by 31 January the following year. Anyone working in a school will understand the stress this brings.
It’s common for smaller trusts to rely on their school business managers to undertake much of this work. However, as a trust expands so teams must adapt.
It is therefore becoming increasingly common for medium and large trusts to employ finance professionals to manage the auditing process and oversee the purse strings.
For example, an effective reconciliation process can help avoid a lot of additional work in the weeks leading up to the annual audit.
Without good reconciliation, there’s always the chance that you will find yourself in a very different position to the one you were expecting, significantly increasing the work required when it comes to auditing.
Our team is able to effectively manage the reconciliation process on an ongoing basis. As the vast majority of the information required is saved on the system, this is a straightforward task and saves a huge amount of time when we come to compiling the full annual audit.
Staff are also able to scan and attach PDF versions of invoices, receipts and proof of funding, ensuring that when it comes to the annual audit, we don’t have to task someone with uploading and inputting a huge amount of key data.
Nobody is under any illusion that the road ahead will be easy for schools, but without the right tools, it is near-impossible to set balanced budgets, minimise unnecessary workload and get the most from limited resources.
By using technology to refine your financial management processes, you’ll be better placed to navigate the challenges with greater confidence and make every penny count.
Jill Alcorn is chief finance officer with the Bosco Catholic Education Trust, Sussex