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Three ways FE colleges can mitigate the risk of budget cuts and save money this year
Charles Darwin himself said that it’s not the strongest that survive, nor the most intelligent, but those that are most adaptable and responsive to change. A fitting sentiment that will echo through the annals of colleges and FE institutions across the country in 2016 – as 2015’s significant and unprecedented education budget cuts take their toll.
Since 2011, colleges have suffered consecutive funding cuts. So much so that the SFCA now concedes that the sector is “under serious threat”, with almost every college fearful of the financial health of their institutions. A report from the National Audit Office revealed that almost half of colleges were in deficit in 2013-14 and The Association of Colleges reports that the average college has made 105 redundancies since 2009/10.
That colleges can no longer guarantee the appropriate funding needed to keep their heads above water is to some extent out of their control, but the ability to mitigate the risk of this is not. The key to their survival rests on fundamental reinvention, and an unprecedented commitment to deliver far more, for far less.
And as is the case across many industries, it starts with cutting costs and creating efficiencies. Here are a few places to start:
Paper invoices are out
The manual processing of paper invoices by staff not only wastes valuable hours that could be redirected to more high value activities, but it is also prone to human error, not to mention the environmental impact. With the average administration cost for a single invoice coming in at £37, inefficient invoicing is costing FE colleges far more than it should.
Colleges should note that electronic invoicing is gradually becoming a standard practice across the vast majority of industries. Unlike their paper equivalent, e-invoices can be easily edited in the event that a mistake is made, and can be both sent, received and safely stored via a host of electronic devices without the need for any human input.
Cash is no longer king
Electronic payments overtook cash a long time ago. The earliest forms of credit cards were introduced over half a century ago, so it may come as a surprise that in 2015 smaller institutions still collect just under £1million in physical currency per year.
Cash handling is extremely inefficient; reducing these manual processes and resources around payments can, in fact, save college’s £30,000 per year, or more.
What’s more, electronic payments are not just more efficient, they are also far more versatile. Technological advancements have paved the way for far greater customer choice: parents and students can now make payments via credit or debit card, direct debits, electronic fund transfers, mobile, contactless – the list goes on. Given the sheer number of more efficient alternatives, the fact that some colleges continue to process large volumes of cash payments every year is unfathomable.
Automate debt collection
Institutions often incur significant administrative costs in pursuit of outstanding debts. In some cases, this can outweigh the cost of the monies due, leaving FE colleges with a choice: waste money chasing debtors, or allow debtors to default.
But colleges do not have to make this choice anymore. Just as modern technology is helping to alleviate the administrative burden of routine personal and business tasks, there are now different types of automated debt collection software that can be tailored to the particular needs of institutions like FE colleges. Cutting down on the money and time lost through pursuing debt will go a long way to improving a college’s financial standing in the face of future cuts.
As is the case across business as a whole, it’s the institutions that are more efficient and make better use of resources that are able to thrive in difficult conditions. And while the road ahead is a rocky one for the FE sector, it is those colleges that are taking the necessary steps to mitigate the impact of budget cuts that will find themselves in a stronger position to overcome any subsequent funding issues going forward.
Holger Bollmann is director at HE/FE payments specialist WPM Education
Source:: FE News
Noaman Islam, Director of Studies-Further Education, Regent Skills Training and Paresh Thakker, Business Development & Sales Manager
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