By Holger Bollmann, Director at HE/FE payments specialist, WPM Education
The outlook for further education (FE) colleges is not bleak, but it is far from rosy. In 2014, the Conservative-Liberal Democrat coalition authorised spending cuts of around 20%. Emboldened by its recent electoral victory, the government has introduced further reductions in budget; the Skills Funding Agency (SFA) announced that public sector financing for adult skills would fall by 3.9% in-year.
FE colleges are already struggling, and as a result are increasingly being made to do more with less. And with a Conservative government assured until at least 2020, the sector is faced with two choices: wait for either a change in parliamentary attitudes (or indeed, a change in parliament), or take action to mitigate the impact.
Complacency is unlikely to be well-rewarded, so FE colleges would do well to explore the latter option. Huge savings can often be found in the last place you would look, and there are ways to reduce your budgetary burden without negatively affecting the overall experience of students or staff.
There are huge efficiency savings to be made across UK FE colleges and here are a few places to start:
Inefficient invoicing places a huge, and unnecessary, strain on FE budgets.
Why? Because it is still largely paper based which is an incredibly labour intensive process and one that is prone to human error, not to mention the fact it comes at an environmental cost. Manual operations are hard to reconcile, take time to chase up, and even longer to process.
Ultimately invoicing involves an investment of time that often outweighs any recouped sum – some estimates place this cost at around £37 per invoice. If a member of staff spends just an hour over the course of a couple of months pursuing a £5 invoice, you’ve already lost money.
Reducing the amount of invoicing your FE college is doing and – without sacrificing the moneys owed – is imperative.
Despite the prevalence of card-based, contactless payment, cash still forms a large proportion of annual revenue for FE colleges. While in some cases cash offices have been removed entirely, smaller institutions still collect just under £1million in physical currency per year.
Cash handling is extremely inefficient: physical currency requires counting – to ensure that it aligns with the amount recorded by the EPOS system – and securing, and both can be expensive.
Remove your organisation’s cash office and your college will reap the benefits in both time and money - reducing these manual processes and resources around payments can save college's £30,000 per year, or more. Some students may grouse about this, but it’s typically a matter of preference over necessity.
When students leave an institution, they tend to leave it psychologically as well as physically. This, unfortunately, can mean that they also think they’ve left it financially as well – often when they’ve still got outstanding student debt. More often than not, it’s borne of forgetfulness rather than malice.
Still, it causes great inconvenience to institutions, which often incur significant administrative costs in pursuit of the amount owed. In some cases, this can outweigh the cost of the moneys due, leaving FE colleges with a choice: waste money chasing debtors, or allow debtors to default.
While FE colleges cannot be entirely blamed for their current financial malaise, they can be doing more to mitigate it. Where areas such as policy cannot be influenced, processes can be. Inefficient processes, whether that comes in the form of issuing too many invoices, wasting time and resources in your cash office, or staff having to chase outstanding debt on graduation, result in monetary loss.
Those colleges that can improve their processes and reduce the in-house resource required by an institution to run those processes will save money in the coming year. And that means they will be in a better position to accommodate any future budget cuts or funding challenges that come their way.
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