Balancing the Books is the Function of FE Finance
But of course FE Finance can’t do it alone.
In reality FE finance works in conjunction with all the other departments. For example in colleges it is curriculum, (often via an Academic board) that usually determines which courses are run . But they have to work with finance to determine their income expectations and how capital can be used to source the resources needed to teach the course.
In conjunction with others finance controls college income and expenditure and attempts to balance them with a view to making a surplus.
However, the number of providers served with Notices of Financial Concern seem to indicate that finance often fails.
Why FE Finance Fails
The biggest expenditure for any provider is almost always capital costs and salaries. In the Capital Expenditure section I explore the idea that we should limit expenditure on huge building projects. In this instance it needs a full provider agreement to make many “unthinkable” changes to the way the provider operates. For this to happen it needs agreement at board level followed by a robust business plan that in turn feeds into finance, curriculum, marketing, estates and IT plans to name but a few. Einstein was clear when he said, “Insanity is: doing the same thing over and over again and expecting different results”.For years we’ve been constructing big buildings at huge cost. Now income is greatly reduced we can no longer service the loans and if we continue in this way we will fail.
A lack of income diversity is also a problem. Most providers get most of their income via government funding sources of one type or another. Each time government makes cuts providers suffer. So other forms of funding become essential. They are hard won but not impossible to find. Indeed some private providers relay 100% on non government income streams.
FE tends to ignore flexible pricing and payment models. So many people look elsewhere for courses.
FE also largely ignores the science surrounding pricing and website psychology at its peril. Very simple changes to prices online can change uptake of courses and sales via commercial enterprise activity. They are simple to make but finance leaves these areas to others and makes little effort to advise in most cases.
These are just a small sample of how FE finance can change its mindset and activities to improve income and cut expenditure. You can discover more by contacting us via our Contact page
For more specific information on this topic please check out the menu items under Underfunding Solutions at the top of the page. Here you will find specific information, in the drop down, on a range of specific areas.
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