14 October 2019
In this day and age it's fair to say that one or two academy trusts are struggling to make ends meet. At this stage, it is important to have a robust recovery plan in place that considers not only future income and expenditure, but also the timing of cashflows that arise from this. In addition to this, the recovery plan needs to be realistic; all too often plans fail because they are based on unrealistic cost savings that never had a chance to be delivered. In this case it is all too easy to provide a set of forecasts that show the trust recovering back to surpluses but then end up scratching heads as to why this never materialised.
Some key points to consider:
- Understand your current costs and identify what savings can be made. Be realistic as to when these can be achieved by, for example when do contracts end so that they can be switched to cheaper suppliers?
- Any redundancies should be clearly thought out: Is anyone due to retire? When will the process start? Even if salary savings can be made, don’t forget about any pay rises and pay grade increases that are due. It's also important not to forget about how the curriculum is going to be delivered as staffing needs to be considered in line with this.
- Think about the timing of grant income and whether this creates ‘pinch points' in the trust's bank balance.
- The recovery plan needs the input and buy-in from the Heads of each school within the trust. There is no point someone in central services dictating savings at an individual school if the Head of that school hasn’t been consulted or at least advised of the plan.
Once a plan has been produced, it is also worthwhile considering getting someone to check over the figures to ensure it stacks up. At UHY we have the experts and experience of assisting trusts produce recovery plans, and this includes performing due diligence on the plan to ensure it is both robust and achievable.
If you have any questions about the changes please contact me or your nearest UHY Academy School specialist.
Alternatively, fill out our Contact Form here.
