It’s that time of year when minds in the Multi-Academy Trust (MAT) sector usually turn to the annual Budget Forecast Return Outturn (BFRO).
BFRO is typically used by the Department for Education (DfE) to review the in-year position and expected outturn of the sector to ensure this financial data can be accurately reported to the Treasury in May. However, for the second academic year running, there have been some changes to the process which Trusts must respond to.
This year, instead of the standalone BFRO form, the DfE has combined the BFRO and BFR3Y into a single online form which will also require the Trust’s three-year forecast. This form goes live on 22nd June, with a submission deadline of 27th July.
It should be noted that all academy trusts must compile longer-term forecasts for their own internal financial planning as required in the Academies Financial Handbook (section 2.11).
Here are my four top tips for MAT Chief Financial Officers and School Business Managers preparing for the academies budget forecast return, and getting ahead of the game with their financial forecasting.
- Always keep your forecasting up-to-date
As a general principle, whilst it can be easy to get caught up in the ‘here and now’ and decide that with so many unknowns (even with the welcome Covid catch-up premium) MAT forecasting will be lacking accuracy, it remains important to make sure this is up-to-date throughout the year. Having prudent financial forecasts at your fingertips is always needed by MAT leaders to aid decision-making and for boards to make informed decisions using reliable data, so never lose sight of the wider strategic need.
- Save yourself time, get into good habits
Not only is there a strategic need for keeping your forecasting up-to-date, there is also a workload issue. By keeping on top of a monthly cycle you reduce the effort for each forecast, and are also only ever a month away from your next set of financial data, so you can therefore ensure that decision-making is always based upon current financial information. Unfortunately we still see Trusts who may only prepare a forecast to satisfy the BFR requirements, when actually work on this should be ‘live’ and ongoing.
- It’s difficult to do this retrospectively
Let’s use the single BFR online form as an example here. If you were to leave the form until the end of July, one element of the BFR submission is your actuals, which cover 1st September 2020-31st March 2021. It is therefore important that the full accounting month end procedure is completed at this point, with all of the necessary adjustments (accruals/prepayments etc) being posted as required. Re-creating historic ‘as-at’ positions is difficult, and accounting systems can struggle with retrospective reporting, so ensuring that this is addressed in April is crucial.
- Future proof your finances
What this past year has shown is that reliable management accounts are needed, as is agility of financial processes. Trust leaders are familiar with operating within a moving landscape and will know the importance of robust financial planning for the future. This means continuing with their in-year forecasting and formulating strategic budget plans even when information, assumptions and reporting deadlines are uncertain. The lack of a robust forecasting process could limit resources available for frontline application.
Here’s how our own MAT software can help: https://www.impsoftware.co.uk/multi-academy-trust-forecasting/ https://www.impsoftware.co.uk/mat-reporting/
Will Jordan is Co-Founder of IMP Software, specialists in MAT budgeting systems. You can also download our new insight report, A Growing Philosophy: How are Multi-Academy Trusts developing their operating models through centralisation? here https://cdn.impsoftware.co.uk/2020/12/A-Growing-Philosophy-%E2%80%93-How-are-Multi-Academy-Trusts-developing-their-operating-models-through-centralisation.pdf