Unprecedented. Yes, it’s overused, but it’s also accurate. There has never been a year like this one – and most particularly within the Higher Education sector, with 2020 bringing its biggest challenges to date, alongside multiple hard-hitting changes.
The pandemic year has had a direct and long-lasting impact on Higher Education institutions everywhere – from reduced income from student numbers and tuition fees to losses on long-term investments, as well as immediate access to financial resources. Plus, there have been the additional pressures of setting up online learning platforms and the associated costs. The financial challenges are so vast that a recent study from the Institute for Fiscal Studies even suggested that thirteen universities might very soon face insolvency without a government bailout.[1]
Of course, it’s not just Covid-19 that has made this an annus horribilis. Brexit continues to cast its long shadow across the sector with its ongoing uncertainty around international student fees, access to EU staff and research grants and partnerships. Then there are other concerns, most notably pension deficits, with the Universities Superannuation Scheme (USS), which pools the pensions of more than 400,000 Higher Education employees, recently revealing it has a deficit of £13billion.[2]
It is a narrative with only one conclusion: the sector has to adapt quickly and improve its financial management and forecasting. Worryingly though, a recent study from the Kauffman Hall Trend reported a lack of progress and momentum in Higher Education:
“76% of Higher Education finance leaders say their institutions lag other industries in adopting modern financial planning practices and tools. Higher Education may have a harder time charting these unknown waters.”
It’s a statistic that needs confronting urgently if institutions are to anticipate and navigate further challenges ahead and the effect on tuition planning, capital investment planning, cash flow management, and budgeting.
Applying financial intelligence
Financial agility is what’s needed if the sector is to progress and manage the current seas of change. By applying robust financial intelligence, you can empower the critical decision-making that will improve financial management efficiencies and forecasting, while also developing opportunities and innovations to stay ahead of the competition.
By modelling different financial plans and initiatives, your institution can more easily and speedily respond to the changing landscape and understand how to re-plan when further challenges come your way. An example of this is Axiom’s Budget & Payroll Planning solution, which enables an institution to forecast staffing decisions and factor in various drivers that impact on staffing.
Further top tips for accurate, agile decisions:
- Put aside time to plan ahead for all potential scenarios, to capture financial data with robust reporting and analysis, to provide decision-makers with different versions of future success.
- Accurately analyse and report on all aspects of your financial performance, develop forecasts and strategies, as well as planning for sustainability and growth.
- Test a mix of plans in order to more easily prioritise the right capital investment to support future growth and develop opportunities, from potential new partnerships and acquisitions to emerging technologies.
- Know your data. If you know your financial data well, this will increase clarity around the drivers that affect your institution, linking operational drivers to financial results.
Surviving the impact of this year and preparing for the years to come means taking total control over finances. To do this, it’s vital that robust financial data continues to take centre stage, so that your office of finance can manage cash carefully, develop forecasts and strategies for future enrolments and create growth strategies for future success.
How can you plan and manage through financial uncertainty?
Drawing on our experience of working with 50 universities worldwide – including Stanford, Yale and UCL – we’ve created a new whitepaper that discusses how Higher Education institutions can control, manage and predict financial performance in times of uncertainty.
Axiom’s whitepaper, ‘Higher Education: How to Plan and Manage through Financial Uncertainty’, explores:
- The challenges facing the Higher Education sector
- How the office of finance can drive change
- A case study on UCL
- How to make finance fit for the future
If you’re ready to take the lead with your financial planning in uncertain times, you can download a free copy of the whitepaper here.
[1] “Will universities need a bailout to survive the COVID-19 crisis?” Institute for Fiscal Studies, 6 July 2020
[2] “Pension deficits are USS: Universities’ pension scheme teeters on the edge” Little Law, 9th August 2020