Make budgeting software work for you

Lynne Higginbottom, bursar at Clitheroe Royal Grammar School, explains  how to ensure you’re making the right choice when it comes to budgeting software

When I started training to be an accountant, back in the early 90s, the fundamentals of cost accounting, budget analysis and financial planning were executed by a variety of exercises and projects. They were handwritten, and added up with a calculator; even when working in private practice, conducting audits and collating information was by way of handwritten figures within your trusty eight-column analysis paper and calculated manually – oh, the joys!

Thankfully, times have moved on and we have a wide variety of different financial software providers out there, offering diversity in relation to the software available to use – particularly in MATs, which have the autonomy to choose which financial software is more appropriate for them. Local authority schools, however, remain very much restricted by the financial software that the local authority approves. 

This brings me onto exploring the benefits of using a budgeting software package. As far as I am aware, there are no restrictions on the method you can use for your budget forecasting. I have, through discussions with colleagues and my own experience, found that many SBMs prefer to use an Excel spreadsheet to calculate their budgets, whilst others are using a variety of different budgeting software packages.

From my own experience, on moving into the education sector several years ago, I fell into the Excel spreadsheet category having invested weeks developing a five-year budget forecast spreadsheet; this consisted of nine individual pages detailing basic assumptions, income, pay scales, staff profile, capitation and expenditure, all filtering into one master forecast summary. Ultimately, it worked well and did exactly what I needed it to do and, therefore, I was not interested in looking at any other methods. I felt that my spreadsheet would be more than sufficient and allow me to provide adequate five year financial planning.

However, being new to education at the time, and relatively naïve (as I now know!), I’d not fully appreciated the fluidity of how quickly things could change around funding, student numbers (sixth form) and impacts on staffing, let alone the urgency of knowing what those impacts would be. My spreadsheet soon became incredibly time-consuming in order for me to present a variety of different scenarios; I was also trying to keep abreast of staffing changes, and to have this flow through the rest of the spreadsheet, into the forecast summary sheet!

Time for a change

After my first academic year, and having gone through the process of preparing and submitting the budget forecast return, the annual accounts return and the budget forecast return out-turn, I realised that I needed something a little more substantial in order to allow me to produce an accurate, yet detailed, forecast – one which could be manoeuvred, and chopped and changed, as many times as I needed with relatively little effort – presently, this had not been an easy task!

Over the coming weeks I researched the different budgeting software providers to ascertain their specific product base and associated costs. It was important that I explored value for money, and also to consider what else the software might be able to offer.  

At this point, I would say to fellow business managers that being part of a local business manager network is invaluable. I am fortunate enough to be involved with two – the Lancashire Academy Business Managers Network and the Lancashire Association of School Business Managers (LASBM). Through networking via these connections, I was able to get involved with four other academies that were also interested in reviewing their budget forecasting process. We agreed that a collaborative approach would best serve economies of scale and we approached several of the main budgeting software suppliers to arrange demonstrations. This would allow us the opportunity to negotiate extremely competitive deals should we all choose to purchase the software – which we did.

There are some exceptional budgeting software packages out there, and I feel the one that I chose has certainly exceeded my expectation. From my own personal perspective, there were certain criteria that I wanted to incorporate into my budgeting process; I didn’t just want a piece of budgeting software, I wanted a piece of software that could offer other benefits.

I knew that the spreadsheet I’d developed was acting as a broad-based guide to what my total staffing costs would be, so it was extremely important that the new budgeting software was able to prove that this provided an accurate reflection of total staffing costs. I also wanted to be able to use actual financial data from September through to March to enable me to accurately forecast where the budget out-turn would be. 

Bringing finance scenarios to life

What I have achieved through this process is the ability reconcile the individual staff contracts within the budget software, month-by-month, to the physical payroll from the payroll reports, thus leaving minimal room for error, as it incorporates physical costs.  

The same applies to non-staffing costs. I now have the ability to export a report from the finance software and import this into the budgeting software. This provides me with the ability to monitor month-by-month, explain variances and carry forward narratives – whilst also allowing me to make out-turn projections in the current year and following four years.  

There are no limitations on the amount of scenarios you can create and I was able to provide the governing body with different scenarios in relation to both the three and five-year budget forecasts.  This was welcomed, particularly in light of the uncertainty around salary increases, pension increases, pay and pension grants.  

During the meeting I had the software projected on to a screen and was able to provide the governing body with the opportunity of a ‘What if?’ live interactive session, where the governors were able to pose questions, which I filtered through the software allowing them to see the immediate impact in relation to their questions. 

Whilst this was partly to demonstrate the software, it was also fun and informative, allowing the governors to witness the impact first-hand – something which they’d not had experienced of before, and which they really quite enjoyed!

Lynne has worked in finance for 30 years, starting in manufacturing. She qualified as an accountant in 2001 and worked for a number of years across Germany and Switzerland as a company accountant for UK operations. She took up the position of group financial accountant for a trade union and management organisation in 2003, and transferred into secondary education three years ago as CFO. Lynne has also served as a primary school chair of governors and governor or a secondary MAT for seven years. She lives in Bolton and has two daughters, plus a miniature schnauzer named Phoebe.

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