Financial planning for schools, MATs and academies: what is it and why is it important?

Understanding the basics of financial planning for schools

Defining financial planning and its importance in the school environment

Financial planning for schools helps organisations allocate resources appropriately, be accountable for any spending and plan for the future. Within schools, MATs and academies specifically, this can help navigate funding cuts, declines in admissions and staff shortages – ultimately allowing them to provide better educational opportunities. We’ve written in depth about best practices for effective school budget planning and how this is important in the school environment. 

Key components of financial planning for schools

A budget is obviously the most essential component of the financial planning process. A School Improvement Plan (SIP) also needs considering as part of the budget. A SIP is all about how a school plans its strategy and how it aims to improve things in future or maintain existing standards if they’re already high. A key part of the SIP is evaluating income and expenditure as it allows them to plan activity.

There are a range of financial planning for schools tools that can help staff and finance teams manage forecasting effectively:

• In years gone by forecasting would have been a manual process done using spreadsheets, but as technology has advanced, it is most effective to use some sort of school budgeting software or MAT budgeting software. Budgeting software works with your school finance system to understand cashflow. Data from these platforms helps finance staff forecast and reforecast accordingly and reports can be exported and shared across the school or trust, improving visibility for key stakeholders so they can make better financial decisions.
• Further tools like curriculum planning software can help schools, academies and MATs understand the affordability of their curriculum by optimising staffing and resources across the academic year and beyond. Statistics like pupil/teacher ratios, FTEs and average class sizes can help manage resources and plan for recruitment.
• A SIP is used in conjunction with a school, academy or MAT’s budget to identify priorities and help focus on specific goals around improving or maintaining standards in the school. The SIP should go into detail about the cost and resource implications of any sort of activity and how this will impact the budget going forward. A SIP should also be considered over a period of a few years alongside the projected forecast to make sure the developmental goals can be reached.  
• An evaluation framework is important for any SIP to monitor and analyse the effectiveness of each activity within it. There should be a clear link between each point of improvement and the school’s financial plans.

Best practices for developing a financial plan for your school, academy or MAT

The components listed above will help establish a financial plan, but in practice how this is done requires a step-by-step approach.

• A clear understanding of your school, academy or MAT’s financial goals and priorities is the first step. This can be influenced by the SIP and your budget, but also involves consulting with school staff, governors, board members and even teachers, depending on the plans for improvement and any investment or key changes that may be on the horizon.
• Carry out a thorough audit of your school, academy or MAT’s current finances. This involves reviewing the budget as well as expenditure, income and sources of funding. Admissions data should feed into this to give an accurate idea of funding for each financial year, i.e. pupil premium allocations.
• The next step is considering all of the above and building it into a sensible budget that aligns with the school’s objectives, growth plans and any planned investments.
• If you are looking to make new investments, make sure there is somebody in the school familiar with procuring new services whether through a public sector framework or directly from a software provider – one size doesn’t fit all and different deals can be obtained via different methods.
• If deciding to use a framework, ensure the school is set up to use these services. If this is not scoped out ahead of time there may be a delay to being able to obtain new software.
• Keep key stakeholders up to date about the school, academy or MAT’s financial plan and how it is progressing towards its goals. If there is a project that needs support this can be a great way of ensuring buy-in as well as making individuals accountable for progress. If you work within a finance team, make sure governors, trust members and key decision makers don’t impede any sort of progress. Equally, ensure teachers and school staff don’t overspend.

Financial planning for schools can be a complicated process, even more so for larger operations. Financial management solutions for MATs has a range of features which make light work of managing such tasks over multiple schools.

The benefits of using the G-Cloud Framework for academy, MAT or school financial planning

The G-Cloud Framework procurement process explained

The UK Government G-Cloud Framework (or G-Cloud Framework for short) is a government programme that helps public sector organisations, including schools, academies and MATs, buy digital services – specifically cloud-based IT services.

The G-Cloud Framework consists of an online store which allows public bodies to search for software alongside framework agreements, which are a type of contract that establishes relationships with suppliers to provide goods over a period of time. In the G-Cloud Framework’s case, this is a normally a period of 12-48 months and it covers a range of vendors that provide services to the public sector.

Before deciding to procure through G-Cloud, write a list of requirements for the software your school, academy or MAT is interested in procuring. We have articles that can help with this that cover topics like finding the best accounting software for schools and building a business case for school finance software.

You will also need to gain approval from stakeholders and also keep an audit trail to show that your assessment of any suppliers is fair and transparent.

Streamlined procurement with the G-Cloud Framework

In summary, the G-Cloud Framework procurement process has five stages, not including the preparatory work outlined in the previous paragraph. In summary these are:

• Save a search – search for cloud products and services using keywords and filters.
• Export your results – the results can be exported to CSV for sharing with stakeholders.
• Start assessing services – choose the best service that meets your budget and requirements.
• Award a contract – the buyer and supplier must both sign the contract.
• Submit a customer benefit record – this ensures a quality service is maintained for other users of the G-Cloud Framework.

For a more detailed look at the procurement process, there is a step-by-step buyers’ guide on the UK Government website which walks users through buying cloud services on the Digital Marketplace available here.

Cost savings and improved efficiency through the G-Cloud Framework

Each service published on the G-Cloud Framework shows how much the software is likely to cost – this transparency can help schools, academies and MATs budget for their investment accordingly. Although the price displayed is the most common set-up of a service, so you should always obtain quotes and pricing documents from your preferred supplier to work out the final price you’ll expect to pay. Also be aware that pricing is usually volume based i.e. the more licences purchased, the lower the cost (per licence).

Enhanced security and compliance with the G-Cloud Framework

The UK Government has published an article about Cloud Security Principles which can help users of the G-Cloud Framework understand how secure suppliers’ services are. These principles advise schools, academies and MATs and the public sector generally on how to choose, deploy and use cloud services securely.

Schools, academies and MATs should also consult with risk management and technical security expertise when buying software, as well as making sure a service meets the school or trust’s security requirements before signing a contract.

Financial planning for schools: Procurement best practices

Developing a procurement strategy for school financial planning

Earlier in this article we discussed the best practices for developing a financial plan for schools – for developing a procurement strategy, the steps are not too dissimilar.

You should firstly check your existing responsibilities and commitments, in essence, carrying out an audit of the contracts you currently have in place. This will help you to determine whether to re-procure the same software or service, or if your school’s requirements have changed, this will dictate whether you need to start putting a proposal together for another software package.

Next look to build a business case, this is covered in more detail in our article on putting together a business case for school finance software.

Inform everybody who needs to be involved in procurement early on in the process. You may need to involve governors and trustees who would appreciate being notified at the earliest opportunity as they’re not necessarily based in the school full time. You may also consider technical experts, legal professionals and other external contractors you may need to call upon the expertise of – so make sure their expenses and time are properly budgeted for.

This falls under the business case document, but you will want to conduct an audit and draft a proper specification for any software you require. This should include a description of what service you need, how it meets the school, academy or MAT’s requirements, the quantity of licences needed and what kind of features it includes as well as delivery timescales.

Effective supplier relationship management in financial planning for schools

A healthy supplier relationship is crucial for effective academy, MAT or school financial planning and budgeting for a multitude of reasons.

Good relationships between suppliers and organisations can lead to lower costs. It’s par for the course in business to negotiate a mutually beneficial price, but clear understanding of a school, academy or MAT’s needs on the provider’s part can ensure the organisation is getting the right budgeting software package and not being oversold. Companies should want to understand what is going to be the right fit for the school, academy or MAT and its staff, and it’s equally important to communicate this well to the supplier so the correct solution is found. Price volatility is also minimised as a good relationship with your supplier means they’re more likely to lock in your subscription fee over a longer term.

Similarly, an active feedback loop with suppliers can improve the software. By speaking to your account manager or customer success team and ensuring your school, academy or MAT’s voice is heard can influence future software development and upgrades to the system – making sure your investment is future proofed and will stand the test of time.

Purchasing software through a procurement tool, has its benefits but its also worthwhile getting quotes from suppliers directly. Using their understanding of the education sector, they can tailor the procurement experience specifically for your academy, school or trust and it’s sometimes easier to manage the relationship directly than use third party procurement solutions.

Liaising directly with suppliers also means they can look at your school academy or MAT’s business needs as a whole and provide you with an integrated solution across school budgets, education finance, HR software for schools as well as payroll. Consolidating the supply chain makes it easier to manage and software solutions that speak to each other seamlessly can improve efficiency and save money.

Choosing the right procurement tools for school financial planning

We’ve mentioned the G-Cloud Framework extensively in this article, but there are other means and ways of procuring software which should be explored by your school – one size does not fit all.

Going directly to a supplier, like Access Education for example, can be more efficient in terms of managing supplier relationships as discussed in the last section. An organisation like Access also employs experts who have worked in the education sector for years so understand the challenges school staff face. They can provide the appropriate advice around strategy and help your school, academy or MAT conduct a technical audit to find out what its requirements are. Access is also equipped to deal directly with academies, trusts, LA maintained schools and independent schools and bring their wealth of experience to negotiations with customers.

Everything ICT is also a public sector procurement tool, similar to the G-Cloud Framework which is suitable for ICT hardware and Cloud based services. The framework is fully DfE compliant and provides services to the Welsh Government, local authorities, Multi-Academy Trusts and even the MoD.

Reporting and analytics for effective academy, MAT or school financial planning

Key metrics for measuring school, academy or MAT financial health

Essential metrics for measuring financial health are a school, academy or MAT’s financial reserves, any surplus or deficit funds. As we’ve talked about previously, developing a financial plan is imperative to remain abreast of any current and future financial challenges and can form the basis of an action plan and how to deal with any issues.

An effective financial plan, alongside stakeholder engagement with trust members, school staff and even the wider public (i.e. parents) can help schools or academies make an action plan if finances continue to look bleak long term. Considering working with another school, academising or joining an existing MAT can help mitigate financial peril.

On the other hand, if a school is flourishing financially, it may look to join forces with other schools to create a new MAT or expand an existing one. Larger MATs can have greater buying power, so procuring any sort of financial tools could be made easier by academising in this way.

Reporting tools and techniques for academy, MAT or school financial planning

Budgeting software for schools and Budgeting software for MATs can provide users with a live and up-to-date view of its financial position and the variables mentioned above. Not only this, but software should also allow users to forecast, reforecast and effectively plan for different financial scenarios, i.e. teacher pay increases, differing pupil numbers and their resultant impact on income. Budgeting software can help schools, academies and MATs pre-empt these circumstances, model the impact and calculate the best response.

Reporting tools can also be used to feed into your SIP to ensure any growth plans are on track and financially viable. A budgeting platform can also integrate seamlessly with your finance software as well as HR and payroll to make sure every element of a budget that needs to be considered is included.

The video below shows a brief overview of how budgeting software can help you plan and report your budgets which can be done at school, group or trust level:

Our article on best practices for effective school, academy and MAT budgeting covers metrics, reporting, techniques and more, giving you a thorough breakdown of how to monitor your organisation’s financial health.

How can software help financial planning for schools

For further details about how software can help with financial planning, check out our education budgeting software as well as our finance software which are complementary tools for producing a robust finance strategy in schools.