What do we know about forecasting in MATS?
Our team have worked with most of the largest and fastest-growing MATs in the country. Previously part of the leadership team that grew and developed PS Financials.
After reviewing the problems that MATs were facing, we settled on Budgeting as the area where the systems landscape seemed to leave a lot to be desired. So last year we set off to build our own MAT focussed Budgeting tool, which addressed what we thought were the key challenges in the sector: consolidated reporting, access security, centralised budget drivers such as pay scales, AWPU rates and central charge calculations that can be fully administered centrally.
These are without question, problems that many MATs are facing, but we quickly realised that they were primarily an issue for the 3-4 month budget period March-June.
In comparison…forecasting and continuous budget management is an all-year-round process that does not stop, AND WE HAD ZERO FUNCTIONALITY!
We have subsequently spent the best part of the last 12 months, speaking to and working with MATs to understand the key challenges they face with forecasting and building a solution that would not just enable a forecast process, but ensure that the process is simple, efficient with complete oversight and control across all schools.
What are the key focus areas?
- Underlying Fundamentals
- Rationalise your coding structure – the what (nominal) and the who (department/cost centre) – less is more is the general principle
- Align coding and references between systems
- Ensure coding accuracy when posting
- Accounting month-end process is a pre-requisite
- System Priorities
- Tech should drive the process, let the systems do the heavy lifting, significant manual effort is inefficient and prone to error, inconsistent and takes focus away from analysis time
- Consider how you combine data across a complicated MAT landscape. Which is the lead system and how do datasets marry up on an ongoing basis, to reduce administration time and increase the opportunity for analysis
- Excel is the most popular tool for forecasting, it’s brilliantly agile, allowing you to format on the fly but this agility can come at a cost and over time, small changes can add up to extensive deviation to the point where the original design is no longer fit for purpose. Instead – a systemised driven forecasting dataset, broken down by month, school, nominal code, and department allows you to repurpose (BFR/BFRO/SRMA/internal audit).
- Whatever the makeup of your trust, ensuring the process is supported by a system that ensures a contributor is limited to their specific responsibility area e.g. a school finance officer cannot prepare and approve their own forecast or override system settings.
3. Adoption and people challenges:
Two core challenges
- Finance team need to understand the requirement of the cycle and what they should be looking for
- Provide step by step guidance which outlines the process and includes the overall aims, task requirements and a checklist of compliance.
- As a minimum split between income/staffing/expenditure – ideally by nominal code.
- Forecasting needs to be a coordinated process that is conducted simultaneously across all schools, teams need to understand the dates that milestones are required
- Month-end accounting timetable is a pre-requisite here and the forecasting timetable is an extension of this process, with the Management Accounts submission as the final output.
4. Keep it simple:
- Don’t expect perfection from day 1
- Manual intervention to be minimised as a priority
- Encourage an iterative approach, with month x being the starting point for month Y
- Ensure that timing differences are easily managed – (curriculum spend profiles)
5. Accommodate single line department budgets, with a varied profile of actuals5Reporting
- Make sure your reporting is digestible and easily repeatable
- Be surgical in your approach to mapping out the process of reporting to maximise time for analysis
- This is a continuous process, always be asking can this be improved or automated
We would love to hear from you about how you overcome the challenge of embedding an accurate and agile monthly forecast cycle. Get in touch with the team at firstname.lastname@example.org