UHY Ross Brooke Chartered Accountants

8 Tips for Effective Financial Management in Academies

academy trust accountants and auditors
Caroline Webster academies and charities specialist

By academy specialist Caroline Webster

Managing finances in an academic institution can be a daunting task, even for the most seasoned trustees. This role comes with the responsibility of being accountable for all financial operations, which requires a keen understanding of budgeting, financial planning, and prudent decision-making.

Through years of experience working with academies I have identified 8 key areas that trustees should incorporate into their strategy to ensure a successful and sustainable academic environment.

1. Understand Your Role as a Trustee:

As a trustee, you are a financial steward, overseeing the academy’s resources to ensure its longevity and prosperity. You must grasp the financial workings of the academy, including its income streams, expenditure, and financial risks. Always stay updated with financial regulations and legislation.

Understanding your role will help ensure sound financial decisions are made, prioritising the academy’s best interests.

All trustees should be aware of the Academy Trust Handbook (see below), which academy schools are required to comply with as a condition of their funding agreement.

2. Proactive Financial Planning:

Effective financial management begins with proactive planning. A strategic, long-term financial plan should encompass all aspects of the academy’s operations and align with its educational goals. This plan should include cash flow projections, risk assessment, capital expenditure planning, and contingency planning. It provides a roadmap for the academy’s financial future, enabling it to withstand unforeseen economic events.

3. Budgeting and Monitoring:

One of the most important duties of trustees is overseeing the academy’s budget. This involves setting realistic budgets based on income projections and expenditure plans. It’s vital to regularly review and monitor the budget, comparing actuals to projections. If there are discrepancies, adjustments should be made to ensure that the budget remains realistic and viable.

4. Implement Robust Financial Controls:

Robust financial controls can help prevent fraud, misuse of funds, and financial mismanagement. This involves setting up procedures for authorising expenditure, recording transactions, and reconciling accounts. Trustees must also ensure that audits are carried out regularly to verify the effectiveness of these controls.

5. Investment and Reserves Policy:

Trustees must also establish a prudent investment and reserves policy. This policy should outline how surplus funds will be invested and the level of reserves the academy will maintain. The policy must be reviewed regularly to ensure that it remains relevant and aligns with the academy’s financial strategy.

6. Training and Development:

Investing in training for both trustees and staff is crucial. This could include courses on financial management, understanding academy finances, and the legal responsibilities of trustees. Regular training ensures that everyone involved in the academy’s financial management is equipped with the necessary knowledge and skills.

7. Open and Transparent Communication:

Effective communication is the cornerstone of good financial management. Trustees should regularly communicate with stakeholders, including staff, students, parents, and the wider community, about the academy’s financial status and plans. This fosters a sense of trust and engagement, and stakeholders are more likely to support the academy’s strategic financial decisions.

8. Embrace Technology:

Finally, trustees should not shy away from using technology to improve financial management. Digital tools can automate various financial processes, making them more efficient and accurate. They can also provide real-time financial data, which can inform strategic decision-making.

Managing finances in an academy is not just about numbers; it’s about using those numbers to make informed decisions that will shape the academy’s future. By incorporating these effective financial management practices, trustees can ensure they are fulfilling their responsibilities and stewarding the academy towards a financially sustainable future.

Remember, effective financial management is a collective responsibility. As a trustee, your role is to lead by example and instill a culture of financial prudence and transparency throughout the academy. With these tips in mind, you can ensure that your academy continues to thrive, providing excellent education for all students.

More information

Download our latest academies publications below or get in touch to discuss your academy needs with our specialist team. Read more about our accountancy and audit services for academy trusts.

Share This Post

Related insights

Talk to us

Newbury: 01635 555666
Abingdon: 01235 251252
Swindon: 01793 610008
Hungerford: 01488 682546