27 February 2018
In the second of our two-part blog series, the first of which focused on how academies can generate additional income, we now look at cost-cutting.
One of the biggest costs within an academy is that of staff costs, a cost which also seems to be one of the first areas under review when carrying out a cost cutting exercise – but this doesn’t need to be the case.
Cutting costs does not always mean reducing the service you deliver; and as a school you use your staff to deliver the service you provide, you may want to consider reviewing other areas first.
Benchmarking – it is important first to benchmark, to assist with this, see our latest benchmarking report which compiles the data of all of our academy clients, the feedback we have received so far has been that these reports are a very handy tool. Use this to look at potential areas where your costs are higher than average – there may be a valid reason why this is the case, or it may mean that this area needs to be looked into further.
Accounting software – as an accountant I feel well placed to talk about the cost and associated benefits of accounting software and in my experience of working with schools I have been surprised by two things: the functionality of some of the software I have seen, and the cost.
Previously when schools were maintained, their reporting requirement was primarily based on budgeting and forecasting – still important within an academy, but now academies also have to produce year end statutory accounts, and everything else which comes alongside that.
The accounting software originally used within maintained schools which was great for budgeting and forecasting is not necessarily the best software for an academy, meaning there is a possibility of increased year end accountancy fees. Not to name any specific packages but I’m referring to the ones which are usually a bolt-on to a whole of school management system.
The accounting software industry has seen a great deal of change for the better over the past few years, with the help of artificial intelligence, machine learning and advancements in technology.
To give you an idea of this, did you know that you can now use a smart phone to take a photograph of a receipt which will upload the details of this into an app which reads and accounts for the transaction? Or that software providers can now create a direct link to your bank accounts, which downloads and can post the bank transactions? The click of a button can instantly produce a budget monitoring report? Some software is even cloud based meaning that it can be accessed from anywhere at any time, providing there is an internet connection. The benefits are amazing and these packages start at less than £20 a month, saving academies up to thousands of pounds in software subscriptions, not to mention the time and effort saved, freeing up your staff to add value elsewhere.
As an accountant, this is an area where I believe costs can be cut without losing any value. Where else within your academy can this be done?
Shared services – one of the great benefits to being part a multi-academy trust is the cost saving effect of sharing services, or benefiting from economies of scale (bulk buying). I would expect that the costs of a single academy trust are greater than that of a similar sized school within a multi-academy trust. If you are a single academy trust, do you have good relationships with other local schools? Could costs/services still be shared?
Leasing vs buying an asset – before investing in capital expenditure such as iPads, computer equipment or machinery, look into both buying and leasing options as there can be quite a large difference in the overall cost. Also bear in mind the end goal – if it’s an asset you’d wish to keep then buying may be the best option, if it’s an asset you’d want to renew after a couple of years, then leasing could be the better option.