Consolidating processes for better financial management

Balancing budgets is the biggest challenge facing schools and trusts across the UK right now, with rising energy bills, calls for higher wages and inflation all playing their part.

A survey of governors and trustees by the National Governance Association (NGA) showed that just 30% of respondents felt financially stable. This uncertainty is showing no sign of easing, with only 35% believing that their organisation is sufficiently funded to deliver its vision and strategy.

Asked about the government’s performance on education, 10% had a positive view - the lowest since first asked in 2011. The problems don’t only relate to financial matters, as recruitment and retention continues to be a problem, with challenges relating to hiring the required number of teaching staff at their highest level since 2016.

But how can consolidating processes and the introduction of a central services team help schools to ensure that they are operating as efficiently as possible?

Better budgeting

No matter the size of a school or trust, those reliant on disparate systems will struggle to gain a complete and accurate picture of their budget. At a basic level, this may create delays in processing, or administrative processes being duplicated.

Longer term, this can be detrimental to the trust’s overall financial health, with overspending, wastage and discrepancies going unnoticed.

Previously, each of DEALT’s eight schools was responsible for compiling its own budget and Kent County Council monitored the process.

Not only did this require eight headteachers liaising with their separate administrative teams, when it came to reviewing the previous year’s budget versus actual spend, schools tended to commission an external expert to review and make appropriate adjustments.

Through all this, there was very little information being shared between the schools. 

Not only was this incredibly costly from a financial and resource point of view, but it also prevented key learnings and best practice from being shared. Now, through the introduction of a shared central services team, the process has been consolidated and time spent on budget planning, monitoring and reporting has been halved.

Dipping into your talent pool

The central services team has representation from all our schools and is made up of three former school bursars, a former front office administrator, a former premises administrator and me as CFO – with an employment history of SME transformation and investment and acquisitions.

The team was brought together from the talent pool already within the schools.

Its purpose is to streamline processes and reduce operating waste. The Trust felt the importance of having a unified team for the schools would make processes and decision-making less time consuming and also free up school employees to concentrate on their own responsibilities. 

The office is located on school grounds, keeping funding within the Trust. The process of creating the team was intense, with tight timeframes; the budget had to be decided, which included the necessary roles, the pay bands those roles might require for the level of experience and then the application process for roles could begin. 

I think of our CST as a horizonal integration and not a vertical one. Each team member has a set of duties that cover all schools, rather than having a set of duties that cover just one school.

In this way, all schools are treated in the same way and all processing follows the same procedures.

Using the right software

While planning and reporting are vital elements of any budget, in today’s challenging economic climate the ability to monitor budgets in real time is also essential - something we’ve only been able to do since implementing the Access Finance and Budgets software.

Now, we can view three numbers - actual spend, projected end-of-year spend and year-to-date (YTD) spend. The ability to track these numbers over time provides us with a much clearer picture of what is going on across the Trust and areas in need of attention.
 
Similarly, with costs spiralling, being able to generate accurate forecasts is incredibly useful. For example, if electricity costs are expected to rise by around 5% year-on-year, we can input this information into the system and map out the projected impact on our budgets over a period of time.

This allows us to be far more proactive in our approach to budgeting and understand where we might see a surplus or have to cut back.
 
Another benefit of consolidating this process is that we can now identify discrepancies in spending. Is one school paying more for a certain service or material than another?

If so, why? Are there any shining examples of schools saving money in a specific area? If so, what can others learn? In such a challenging market, these insights can make a huge difference to the whole school and the quality of teaching it’s able to deliver.

Improving day-to-day financial management

It’s not just the budgeting process that’s improved, the management of day-to-day finances across the entire organisation has been significantly streamlined since we implemented new systems and processes.

Before the introduction of the shared services team, six of our eight schools relied upon a member of the front office team to manage basic financial tasks, such as allocating payments for school trips or ordering supplies for teachers.

Not only did this act as a distraction and, at times, prevent them from being able to effectively support pupils, teachers and parents, these individuals were often asked to undertake an array of additional tasks that did not fall within the scope of their role.

Now, all of this is handled by the central services team. Not only has this largely freed-up the front office staff, it has also allowed us to slash the amount of money we are spending with service providers - software is one great example.

As we are now purchasing licences as a collective, we qualify for a greater discount. In fact, we’ve seen a reduction of between 10% and 15% in our spending on software. 

The consolidation of certain processes and introduction of specialist technology has allowed us, at DEALT, to generate significant savings. This resource is already being re-deployed to help teaching staff to provide the best possible student experience.

How the CST has made efficiencies

Here are two examples of how Trust has benefitted from our shared team:

• Prior to academising, our six schools used different methods to achieve ICT compliance - from an employee dedicated to ICT, through weekly appointments, to drop in on request only. The difference in activity was startling, but also incredibly inefficient. The team analysed the patterns of usage, the costs of usage and our needs as a trust, which helped us determine the required level of ICT deployment and look to the local marketplace for a provider. This has yielded thousands of pounds of savings for the Trust and the external ICT provider can plan for activities with greater detail because they are an active part of the conversation.
• When it comes to the use of centralised accounting, budgeting and HR systems, this joined up level of thinking and processing is absolutely essential for reporting and monitoring, and ensures all our schools work on a level playing field when it comes to data and fund handling. We simply couldn’t achieve this if our school finances were processed on site by individuals within that school. Having these horizontal connections to the schools eradicates inconsistency, the friend of inefficiency.

David Myatt is chief finance officer with the Deal Education Alliance for Learning Trust (DEALT)