We often hear complaints about skyrocket tuition fees and seemingly unreasonable tuition hikes. But, these talks die down when a clear breakdown of the school’s finances is presented to them.
Proper management of school finances organizes the institution’s cash flow and is then used to make crucial decisions for its development. But, financial management is not a walk in the park. It is even a more challenging feat when thousands of students rely on your financial literacy and decisions.
Let’s look into effective school financial management deeper.
Why Manage School Finances Effectively?
First off, let’s expound on why effective financial management in schools is critical.
We must always keep in mind that building and founding a school is a business venture. Therefore, it requires proper financial management to keep it afloat and relevant amongst the flood of competitors.
Effective management is often linked to the concept of budgeting. Although it is one of its significant elements, financial management goes beyond that. It covers planning, allocation, and directing the school’s annual finances.
With proper financial planning, you can allocate the budget properly without compromising anything essential for the institution. On top of that, effective management directs the cash flow better. It won’t leave the school’s development stagnant because of the lack of resources.
There will be a steady flow of income and expenses that turns the gears of the institution’s progress.
How to School Finances to Manage
After understanding why effective school management is necessary, let’s look into the How.
How does one start to manage school finances effectively?
1. Record Financial Transactions Religiously
On top of anyone’s head, effective and exhaustive financial management includes religiously recording transactions. For schools with several sources of income and expenses, it’s best to bunch them up into different categories to organize all the data.
A school’s leading source of income is, of course, the student’s tuition fees and other admissions-related fees.
In a school management software like GoSchooler, you can easily collect student fees through its portal.
This screenshot from GoSchooler site shows that all fees collection tasks are clustered together for easy navigation.
Recording the student’s payment record is essential for financial management, and it is vital for the enrollee’s record. To record the student fees, classify them according to what it needs to pay off for.
Bunch all tuition fees together in the same way that you classify all library and publication fees together. In this manner, it decreases the time you need to spend allocating the lump budget. Along with reducing the planning time, you also get to avoid arguments that might arise from thorough financial planning.
On the other hand, it is wise to record the significant reason for the budget’s out-flow. Payroll takes off a substantial chunk of the institution’s annual working capital.
A good thing about tracking the payroll from the overall budget is it is easy compared to other accounts. Computing each employee’s annual pay is straightforward. Aside from that, the pay frequency is also fixed, making it a permanent element in monthly budget plans.
School Development Expenses
The total school budget will always have an allocation for development expenses. These expenses are meant for expansion or beautification projects that will, in turn, heighten the quality of the school.
These development projects also account for acquiring new laboratory equipment and gadgets that help improve the learning process.
Keeping track of these transactions is more taxing than the previous ones because of their dynamic nature. Moreover, every year’s transactions are not fixed, whether on the item, service, or provider.
A best practice to account for each one is to record receipts and invoices. It may add to the existing pile, but this practice makes sure that every single coin is spent wisely. It is also smart to look into your existing expense approval process to ensure that all transactions are accounted for.
2. Create a Detailed 3 to 5-Year Financial Plan
Strategic financial plans become your best friend and most essential tool when it comes to effective school finance management.
Nothing makes your planning more specific and stringent when you are forced to think ahead and consider various forecasts.
Creating a financial plan starts with the biggest contributing factors to the budget and works your way down. Follow the same manner when accounting expenses. Once completed, you have a better grasp of cash flow.
More than that, you can make better decisions for the current year’s budget to achieve the set of long-term financial goals.
3. But, Leave Room for Adjustments and Compromise
A specific long-term financial plan is excellent, but remember to always leave enough room for adjustments and changes. Make the plan as a guide to your institution’s financial true north.
Changes are welcomed as long as they don’t stray from the goal.
4. Do Away from Unnecessary and Repetitive Expenses
Effective financial management also means weeding out unnecessary expenses.
As stated in the previous item, follow the school’s financial true north. If the expense does not further the development along the line, then drop it.
These transactions are also easy to spot once you follow through with meticulous tracking. Once pointed out, the budget allocated initially can be channeled to more essential factors, such as digital classroom or journal subscriptions.
5. Uphold Accountability and Transparency
Lastly, financial management is never complete without full accountability and transparency. Anything that involves a pool of money from various contributors is a collective issue.
Transparency lets the stakeholders know where their money is going and how they will benefit from it. Accountability, on the other hand, pertains to the responsibility that comes with each financial decision.
These traits are essential in managing school finances because someone needs to be responsible for the money from the students. Somebody needs to make sure that it will be for the students.
What Tools to Use to Manage Finances Effectively?
Managing finances, in general, is a daunting task. But, it becomes manageable with the following tools.
School Management System Software
Invest in school management software.
The software will take care of all school-related processes, especially finances. GoSchooler, in particular, lets you schedule and automate fee collection. In addition, the system collects and compiles the essential data in the process, which is easily accessible.
You also don’t need to worry about issuing invoices to each payee as GoSchooler also automates the process. The user has the liberty to download the softcopy or have it printed out.
As shown in the screenshot from above, GoSchooler allows you to choose whether to print out an invoice for multiple or single fees.
This school management software also embodies transparency as the portal is accessible to students and parents who want to check their payment process and fees.
Billing and Invoicing Software
If you are still partial against school management software, then you might want to get your hands on billing and invoicing software to serve the same purpose.
This software is primarily used to do accounting and bookkeeping tasks. In addition, it is used to record each financial transaction, so you won’t have to do it by hand. Basic versions of billing software also automate check writing, which comes in handy for manual payroll distribution.
Most businesses use this software for its convenience. It provides professional-looking invoices that are customizable to fit the enterprise’s branding.
Free Digital Spreadsheet Software
If your school’s current budget does not have enough to allocate for the automated software, there is readily available digital spreadsheet software. The most popular options are Microsoft Excel and Google Sheets.
Microsoft Excel is accessible without any internet connection, which might be an issue for some district schools. Ultimately, this spreadsheet is an excellent tool for transaction tracking and planning. It can also double as a proxy for school management software.
You can configure the cells to automatically compute the numbers to come up with monthly expenses and income. Several other configurations within the software help create financial plans and, even, annual forecasts.
On the one hand, Google Sheets serves the same purpose, but it requires a stable internet connection and an above-average computer unit. On the upside, if you choose to use Google Sheets, it makes work collaboration easier.
You can work on the same sheet with other people at the same time. In addition, real-time collaboration and project updates are better with this free software.
Despite the availability of these free versions, both applications have paid versions that come with other premium uses of more software applications under their brands.
Manual Financial Management
Lastly, if investing in finance management software is the least of your priorities, then we’ll stick with the good old ledgers and notebooks.
Although this method is more time-consuming and taxing than the others, it can achieve and deliver the same goal.
You can make sure that you have enough ledgers to separate different sources of income and expenses. Don’t make the grave mistake of compiling the data in a single notebook lest you won’t have any idea which money comes from where at the end of the year.
Make sure to label each notebook properly. Add short descriptions, if necessary.
Managing finances, in general, is an arduous process. But, unfortunately, the challenge multiplies leagues more when it comes to managing school finances.
To help you in the process, the list above serves as a reminder of what to focus on managing finances. In addition, don’t forget to look into the list of tools that will play a significant role in your effective financial management.
Lastly, don’t rush the process. Effective management takes shape with time. Of course, there will be bumps along the way, but you’ll be along the path of your true financial north.