Subscribe to our free newsletter and stay ahead with the latest news from the academy, free school & UTC sector

How to make academy finances work harder

School funding will remain a political hot potato for as long as we have party politics says Dafydd Llewellyn, Managing Director of SMBs at Concur

Posted by Lucinda Reid | July 22, 2017 | Law, finance, HR

In the post-mortem analysis of the most shocking of shock election results, it was not the nuances of various Brexit positions that swung it. Nor was it strength, stability, chaotic coalitions, mangled manifestos, or the ability to empathise with victims of violence – although these all played their part.

Instead, the feedback received from all parties pointed to schools – more precisely, the funding of schools – that influenced voting behaviour. Not for the first time, the electorate decided that ‘education, education, education’ is one of their top priorities, and caught plenty of politicos on the hop.

But with funding formulas, free school meals, pupil premiums and the news that teachers have seen a drop in median real earnings from £25 to £22 an hour hogging the headlines, the day-to-day realities of managing academy finances have taken a back seat in the public debate.

Finance front and centre

While not the dreams of headline writers, the management of academy finances are still very much front of mind for treasury and finance teams, which are tasked with spinning a wide variety of plates, without allowing any to drop.

Like any other small or medium-sized business, academies sit at the heart of a complex supply network. IT equipment and text books; building and renovation work; classrooms and canteens – not to mention supply staff, recruitment and training – there are dozens of payment streams in and out of the average school.

Some are regular and predictable. Many others come in the form of emergency expenditure, or as the result of a recent but dramatic increase in the local school-age cohort. This hard-to-predict spend tends to have a much more brutal impact on the school’s financial well-being.

And whereas SMBs who operate wholly in the private sector may choose to build up a ‘cash cushion’ to protect them against the unexpected costs (even if it may not be the optimal strategy), academies simply don’t have this option. The idea of a rainy-day fund is certainly attractive – but not when the rainy day is coming through the roof of the science block.

By automating core spending functions, academies can create a much more accurate view of their cash position and future commitments

However, the absence of either a cash cushion or a crystal ball need not condemn academy managers to constant financial fire-fighting. Instead, with the right technology, academies can open up insight into their cash flow, allocate vital funds to the right cost centre at the right time – and keep more of those plates spinning as the academic year unfolds.

Automation, automation, automation

This could be the new mantra for educational finance teams. A combination of paper receipts, purchase orders and invoices – and a reliance on standard spreadsheets to manage them all – remains the biggest source of inefficiency, error and duplicated effort in the finance department.

Not just slow and cumbersome, a paper-based set up obscures the reality of monthly and annual spend. Without visibility, there is no real control. And without a real-time status of cash flow, there’s only a picture of last month’s financial status – or whenever the most recent invoice was received or purchase order issued. Cash flow gets out of sync, bank reconciliations become unnecessarily labour-intensive (not to mention frustrating) and unpleasant surprises lurk around every corner.

But by automating core spending functions, academies can create a much more accurate view of their cash position and future commitments. A single, online system that manages all purchase orders, e-invoices, paper invoices (both payable and receivable) and supplier networks seamlessly will greatly reduce errors and the time needed to manage it all.

Management, measurement, and minimisation

But that’s just the start. As every manager knows you can’t manage what you can’t measure – and you can’t measure what you can’t see. Manual processing means that financial data is hard to locate and almost impossible to synthesise and analyse. Given the level of insight that is hidden in financial documentation, this is a huge loss.

But automate the feed of that data into a payments management system, and it can deliver unprecedented level of insight into spending habits and potential bottlenecks to cash flow – as well as identifying trends over time that enable better forecasting and financial planning.

Like all small businesses that are reliant on manual processes, academies can be a natural target for invoice-related crime

They can also spot anomalies, exceptions and abnormalities to give financial controllers exactly that: financial control. For example, a third of UK finance leaders admit to having paid a duplicate invoice. Some of those finance heads can be found in academies. It’s a common error that takes time to rectify – if it is spotted at all. But it is also an error that is entirely avoidable, particularly when the technology is available to automatically process any number of invoices with almost 100 per cent accuracy.

Duplicate invoice payments are at the benign end of the leaky spectrum. The other is deliberate fraud. Like all small businesses that are reliant on manual processes, academies can be a natural target for invoice-related crime.

 ‘Invoice phishing’, in which scammers send hundreds of fake invoices in the reasonable hope that some will slip through the spam-filter and be accidentally paid by harried finance teams, has proven both effective and costly. Such scams are successful precisely because fraudsters know that finance teams are swamped by paperwork. Whereas humans get bored, tired or careless – machines do not. They are much better therefore at consistently flagging invoices that don’t match purchase orders or sales and picking up on potential fraud as a result.

Difficult choices and long-term thinking

Like all bodies operating in the public sector, academies have to watch every penny. The choice between educational equipment and back-office equipment often becomes no choice at all. It’s certainly not the likely beneficiary of fund-raising drives or parental donations.

But the evidence is clear that time and time again automation pays for itself. The savings that can be generated through more efficient operations, better financial forecasting and reduced error and leakage can be substantial.

School funding will remain a political hot potato for as long as we have party politics. It’s unpredictable at the best of times and a major windfall seems unlikely any time soon. But now and in the future, there is much to be said for arming finance teams with the tools needed to make every single penny works as hard as it can in the service of educating our children – even those tools that pupils never see.

For more information about Concur, visit their website.

Subscribe to our free newsletter and stay ahead with the latest news from the academy, free school & UTC sector

Related stories

UB September issue out now!

UB August issue out now!

How to add outdoor adventure into the curriculum

Academy in Gateshead shows signs of early improvement

Schools must face their financial reality

How a UTC education provides a doorway to social mobility

UB May issue out now!

Is joining a MAT the right decision for your school?

Lydiard Park Academy awarded e-learning Centre of Excellence

What should schools consider when reopening as an academy?

Market place - view all

Portable Facilities

Helping you provide outstanding learning environments by upgrading ...

Listen technologies

Listen Technologies brings power and clarity to the sounds that enr...

Sodexo

Our positioning in the services industry is original and unique. It...

Huck nets

For over 50 years, the HUCK-Label has signified: - high-quality ne...

Hamworthy heating

Hamworthy Heating is a leading British commercial boiler manufacturer...

Compass

Compass Computer Consultants Ltd. has been designing and implement...