Monthly management accounts are the most useful financial tool a headteacher has at their disposal.
However, when presented with a spreadsheet full of numbers it can be difficult for some to know where to start, or what questions they should be asking of their business manager. Here are the top five things you should be digging into each month:
1. Monthly performance
Your management accounts should clearly state your actual expenditure for that period (month) against the forecasted expenditure for the month. The forecasted expenditure is usually the annual budget distributed evenly across 12 months. By comparing this information, you should know if you’re behind, on track or ahead of budget. You should know whether a variance is planned – ie an annual invoice – or if there’s an issue that will require monitoring (such as an unplanned overspend). Your SBM should provide you with details of any significant variances for the month and outline any mitigating action, if required.
2. Performance against budget
Looking at the year to date expenditure against the full year budget can indicate whether any significant issues require attention. Quality management accounts provide a full-year forecast based on year to date expenditure, working on the assumption that current spending patterns will continue. This data will highlight how any overspend may impact your planned year-end position, while also flagging up cost centres that require additional control or indicate significant underspend.
An in-year budget reforecast based on this information is considered good practice and should be undertaken by your SBM in consultation with yourself and your governing body or MAT.
3. Staffing costs
Depending on the structure of your management accounts, your core staffing and agency costs may be lumped together. Ensure that you receive expenditure, forecast and budget figures for these areas separately to gain a concise picture of staff costings. Ask your SBM to further break down agency costs into vacancy cover, sickness cover, planned absence and training cover. That way, you’ll gain further insights into your agency costs, whether any overspend can be offset against any underspend in areas of your staffing costs, or whether you’re heading for an overspend.
4. Key expenditure lines
Ensure that income and expenditure lines for areas such as catering, uniform and school trips are accurate and regularly reviewed to determine whether there’s a profit or loss in those areas. Ensure that any loss is forecasted and factored into the bottom line. Also ensure that if any expenditure is to be recharged to departments or teams (ie reprographics, hospitality or stationery), that this is undertaken on a regular basis and that departmental expenditure is reviewed and communicated with heads of department.
5. Planned expenditure
Odds are that since setting the budget you’ve had to purchase some items you hadn’t planned for, or needed to pay some unforeseen maintenance costs. Sit down with your SBM to check that your planned budget is still realistic, and determine whether any of your plans might need to change to accommodate your financial position.
Laura Williams is a former MAT chief operations officer and school business manager, and the founder of LJ Business Consultancy.