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Financial management
The ultimate guide to financial planning in education
If you strip away the frameworks, the templates and the terminology, financial planning in education is really about one thing: deciding what you are willing to risk, and what you are not, in order to keep delivering education in a system that rarely gives you enough slack.
That’s true whether you’re running a small primary school, a large secondary, or a multi-academy trust with dozens of moving parts. The scale changes, the mechanics change, but the underlying tension doesn’t. There is always more you would like to do educationally than the funding comfortably allows. And there is always a point at which financial decisions stop being abstract and start affecting real people.
That’s why education sector financial planning never quite behaves like financial planning anywhere else. You’re not optimising for growth or margin. You’re trying to maintain stability, credibility and educational integrity at the same time, often under scrutiny, often with hindsight judgement, and often with rules that change faster than your planning cycles.
This guide isn’t about telling you what you “should” be doing in an ideal world. It’s about unpacking what financial planning in education actually looks like when you’re dealing with pressure, constraint and uncertainty — and why the way many organisations approach it no longer works.
Why financial planning in education feels harder than it used to
There’s a tendency to talk about the current moment as uniquely difficult. In reality, education finance has always been tight. What’s changed is not just the level of pressure, but the nature of it.
Funding is more complex. Accountability is more visible. Costs are less predictable. Expectations from regulators, parents and the public are higher. And tolerance for mistakes is lower.
At the same time, the system increasingly expects schools and trusts to behave like sophisticated organisations. Forecasting several years ahead. Demonstrating value for money. Managing risk proactively. Producing clear narratives for governors, auditors and the ESFA.
This creates a gap that many education leaders feel but struggle to articulate. They are being asked to plan with a level of precision and foresight that the system itself does not always support.
Financial planning in education therefore becomes less about certainty and more about navigation. You are plotting a course through changing conditions, knowing that some assumptions will fail, and that part of your job is noticing that early enough to respond.
What people usually mean by “financial planning” — and why it’s not enough
Ask ten people in education what financial planning means and most will describe some variation of budgeting and forecasting. Annual budgets. Three-year plans. Sensitivity analysis. All important. All necessary.
But if that’s where financial planning starts and ends, you’re really just describing compliance.
True education sector financial planning sits upstream of the numbers. It starts with intent.
- What kind of education are we trying to provide?
- How stable do we want staffing to be?
- How much curriculum breadth are we willing to protect?
- How much risk are we prepared to carry, and for how long?
These are not purely financial questions, but they have financial consequences whether we like it or not.
When planning is reduced to spreadsheets, those questions get answered implicitly, often without discussion. And that’s when organisations drift into difficulty without quite understanding how they got there.
The quiet cost of optimism
Optimism is not a flaw in education. It’s often what keeps schools going. But in financial planning, unexamined optimism can be expensive.
Many plans fail not because they were careless, but because they quietly assumed that things would improve. Pupil numbers would stabilise. Funding would catch up. Staffing pressures would ease. A one-off problem would remain one-off.
Sometimes those assumptions turn out to be right. Often they don’t.
Effective financial planning in education creates space to test optimism without extinguishing it. It asks: if this improvement doesn’t happen, what then? How much time do we have? What would we do differently?
This is where many organisations get stuck, because confronting these questions feels pessimistic, even disloyal. In reality, it’s an act of care.
When financial pressure becomes normalised
One of the most dangerous moments in education finance is when pressure becomes background noise.
Small deficits are tolerated because they’re manageable. Short-term fixes become habits. Recovery plans are rolled forward. Reporting focuses on reassurance rather than clarity.
By the time the situation becomes urgent, options are fewer and consequences sharper.
This is why understanding the challenges of financial management in schools is about recognising patterns early enough to intervene gently, rather than late and painfully.
Financial planning in education works best when it surfaces uncomfortable truths early, while there is still room to manoeuvre.
Deficits: what actually goes wrong
Deficits deserve more honesty than they usually get.
They are rarely the result of a single bad decision. More often, they are a series of reasonable choices made under pressure, each defensible on its own.
A curriculum commitment here. A staffing decision there. A temporary funding dip that never quite recovers.
Each step makes sense in isolation. Together, they create a structural problem.
Falling into deficit happens. But the real failure is seeing it clearly and not responding.
Organisations that recover well tend to do three things early:
- Name the issue clearly, without euphemism
- Understand the drivers, not just the numbers
- Accept that recovery takes time, not heroics
Guidance on how schools can get out of financial deficit often focuses on mechanics. The harder work is psychological: resisting denial, managing reputation, and holding nerve when progress is slow.
Want to get on top of your financial planning?
Effective financial management is a behaviour, rather than a toolkit
Most schools and trusts already have policies, procedures and controls. What separates those that cope from those that struggle is not the existence of these tools, but how they are used.
Effective financial management in education shows up in behaviours:
- Leaders ask financial questions early, not at sign-off
- Forecasts are discussed, not just produced
- Variances trigger curiosity, not defensiveness
- Governors engage with trends, not just totals
This is the difference between having financial information and using it. And it’s why effective financial management in schools is as much about culture as it is about competence.
The curriculum–finance disconnect no one wants to own
Curriculum planning is often treated as sacred territory. Financial planning is treated as necessary reality.
When these two worlds don’t meet, the consequences are predictable.
Staffing models drift. Timetables strain. Class sizes creep. Specialist provision becomes fragile.
Integrated planning is about acknowledging that every curriculum choice has a financial shadow, whether or not it’s examined.
This is where integrated curriculum and financial planning becomes powerful. Not because it simplifies decisions, but because it makes them explicit. It forces conversations that are otherwise postponed until they’re unavoidable.
Why marginal gains thinking fits education so well
Large-scale reform is rare in education finance. More often, survival and stability are achieved through accumulation.
Better data here. Clearer reporting there. A slightly improved process. A small reduction in friction.
Individually, these changes feel unspectacular. Collectively, they change how an organisation experiences pressure.
A marginal gains approach to financial planning in education respects the reality that schools rarely have the capacity for constant transformation. It focuses instead on making the system a little more intelligible, a little more responsive, a little less brittle.
That thinking underpins work on marginal gains in education and is supported by practical tools in the marginal gains resource hub.
Technology as an enabler, not a solution
It’s worth being clear about what technology can and cannot do in education sector financial planning.
Software will not fix underfunding. It will not remove trade-offs. It will not make hard decisions painless.
What it can do is reduce the cognitive load. It can surface patterns earlier. It can connect plans that were previously fragmented. It can support better conversations.
The real value of technology less about speed and more about confidence; confidence that decisions are based on coherent information rather than guesswork and reconciliation.
What sustainable financial planning actually looks like in practice
Sustainability is an ongoing posture rather than a static state.
In education, sustainable financial planning looks like:
- Assumptions that are revisited, not defended
- Plans that are adapted, not protected
- Leaders who understand both the numbers and their limits
- Governance that balances challenge with support
Above all, it looks like an organisation that treats financial planning as part of its educational responsibility, rather than a parallel obligation.
That is the heart of effective financial planning in education today. Not mastery, but maturity. Not certainty, but awareness.
A closing thought
There is no perfect model for education sector financial planning. There is only better thinking, better conversations, and better timing... and better resources.
The resources linked throughout this page explore specific aspects of that work in more detail. Together, they form a way of approaching finance that is realistic, grounded, and honest about the pressures schools, academies and trusts face.
For further details about how software can help with financial planning, check out our education budgeting software as well as our finance software which are complementary tools for producing a robust finance strategy in schools.
Financial planning for schools, MATs & academies resource hub
Who is responsible for financial management in schools?
Marginal gains, big impact
Marginal gains in education: Small steps that help schools & trusts make strides
Tips for effective financial management in schools
What does it mean for a school to go into financial deficit – and how do you get out of it again?
How budget cuts affect schools: Challenges and solutions for financial management
The ultimate guide on Integrated Curriculum Financial Planning (ICFP) for schools and trusts
Discover how can software help financial planning for schools
FAQs
How do schools create a financial plan?
Schools create a financial plan by reviewing expected income, identifying costs, setting priorities and building a budget that aligns with their goals. This often includes forecasting pupil numbers, staffing needs and future risks.
What is the biggest budgeting challenge for MATs?
The biggest challenge is balancing the needs of individual academies with trust-wide financial targets. MATs have to distribute funds fairly while still supporting each school’s unique priorities.
How can academies improve forecasting accuracy?
Academies improve accuracy by using reliable pupil-number data, tracking staffing trends, reviewing multi-year funding changes and using software that models different scenarios.
What should a school finance system include?
A good system should include budgeting tools, multi-year forecasting, reporting dashboards, scenario modelling and controls that help maintain compliance.
Why is financial planning important for school leaders?
Good planning helps leaders protect educational outcomes by ensuring the school can afford the staff, resources and investments needed to support pupils.
What is the definition of financial planning in an education context?
Financial planning for schools and MATs helps organisations allocate resources appropriately, be accountable for any spending and plan for the future. Within schools, MATs and academies specifically, this can help navigate funding cuts, declines in admissions and staff shortages – ultimately allowing them to provide better educational opportunities. We’ve written in depth about best practices for effective school budget planning and how this is important in the school environment.
What are the key components of financial planning for schools?
A budget is obviously the most essential component of the financial planning process. A School Improvement Plan (SIP) also needs considering as part of the budget. A SIP is all about how a school plans its strategy and how it aims to improve things in future or maintain existing standards if they’re already high. A key part of the SIP is evaluating income and expenditure as it allows them to plan activity.
There are a range of financial planning for schools tools that can help staff and finance teams manage forecasting effectively:
- In years gone by forecasting would have been a manual process done using spreadsheets, but as technology has advanced, it is most effective to use some sort of school budgeting software or MAT budgeting software. Budgeting software works with your school finance system to understand cashflow. Data from these platforms helps finance staff forecast and reforecast accordingly and reports can be exported and shared across the school or trust, improving visibility for key stakeholders so they can make better financial decisions.
- Further tools like curriculum planning software can help schools, academies and MATs understand the affordability of their curriculum by optimising staffing and resources across the academic year and beyond. Statistics like pupil/teacher ratios, FTEs and average class sizes can help manage resources and plan for recruitment.
- A SIP is used in conjunction with a school, academy or MAT’s budget to identify priorities and help focus on specific goals around improving or maintaining standards in the school. The SIP should go into detail about the cost and resource implications of any sort of activity and how this will impact the budget going forward. A SIP should also be considered over a period of a few years alongside the projected forecast to make sure the developmental goals can be reached.
- An evaluation framework is important for any SIP to monitor and analyse the effectiveness of each activity within it. There should be a clear link between each point of improvement and the school’s financial plans.
What are the best practices for developing a financial plan for your school, academy or MAT
- A clear understanding of your school, academy or MAT’s financial goals and priorities is the first step. This can be influenced by the SIP and your budget, but also involves consulting with school staff, governors, board members and even teachers, depending on the plans for improvement and any investment or key changes that may be on the horizon.
- Carry out a thorough audit of your school, academy or MAT’s current finances. This involves reviewing the budget as well as expenditure, income and sources of funding. Admissions data should feed into this to give an accurate idea of funding for each financial year, i.e. pupil premium allocations.
- The next step is considering all of the above and building it into a sensible budget that aligns with the school’s objectives, growth plans and any planned investments.
- If you are looking to make new investments, make sure there is somebody in the school familiar with procuring new services whether through a public sector framework or directly from a software provider – one size doesn’t fit all and different deals can be obtained via different methods.
- If deciding to use a framework, ensure the school is set up to use these services. If this is not scoped out ahead of time there may be a delay to being able to obtain new software.
- Keep key stakeholders up to date about the school, academy or MAT’s financial plan and how it is progressing towards its goals. If there is a project that needs support this can be a great way of ensuring buy-in as well as making individuals accountable for progress. If you work within a finance team, make sure governors, trust members and key decision makers don’t impede any sort of progress. Equally, ensure teachers and school staff don’t overspend.
Financial planning for schools can be a complicated process, even more so for larger operations. Financial management solutions for MATs has a range of features which make light work of managing such tasks over multiple schools.
What are the benefits of using the G-Cloud Framework for academy, MAT or school financial planning?
The G-Cloud Framework procurement process explained
The UK Government G-Cloud Framework (or G-Cloud Framework for short) is a government programme that helps public sector organisations, including schools, academies and MATs, buy digital services – specifically cloud-based IT services.
The G-Cloud Framework consists of an online store which allows public bodies to search for software alongside framework agreements, which are a type of contract that establishes relationships with suppliers to provide goods over a period of time. In the G-Cloud Framework’s case, this is a normally a period of 12-48 months and it covers a range of vendors that provide services to the public sector.
Before deciding to procure through G-Cloud, write a list of requirements for the software your school, academy or MAT is interested in procuring. We have articles that can help with this that cover topics like finding the best accounting software for schools and building a business case for school finance software.
You will also need to gain approval from stakeholders and also keep an audit trail to show that your assessment of any suppliers is fair and transparent.
Streamlined procurement with the G-Cloud Framework
In summary, the G-Cloud Framework procurement process has five stages, not including the preparatory work outlined in the previous paragraph. In summary these are:
- Save a search – search for cloud products and services using keywords and filters.
- Export your results – the results can be exported to CSV for sharing with stakeholders.
- Start assessing services – choose the best service that meets your budget and requirements.
- Award a contract – the buyer and supplier must both sign the contract.
- Submit a customer benefit record – this ensures a quality service is maintained for other users of the G-Cloud Framework.
For a more detailed look at the procurement process, there is a step-by-step buyers’ guide on the UK Government website which walks users through buying cloud services on the Digital Marketplace available here.
Cost savings and improved efficiency through the G-Cloud Framework
Each service published on the G-Cloud Framework shows how much the software is likely to cost – this transparency can help schools, academies and MATs budget for their investment accordingly. Although the price displayed is the most common set-up of a service, so you should always obtain quotes and pricing documents from your preferred supplier to work out the final price you’ll expect to pay. Also be aware that pricing is usually volume based i.e. the more licences purchased, the lower the cost (per licence).
Enhanced security and compliance with the G-Cloud Framework
The UK Government has published an article about Cloud Security Principles which can help users of the G-Cloud Framework understand how secure suppliers’ services are. These principles advise schools, academies and MATs and the public sector generally on how to choose, deploy and use cloud services securely.
Schools, academies and MATs should also consult with risk management and technical security expertise when buying software, as well as making sure a service meets the school or trust’s security requirements before signing a contract.
What are some procurement best practices?
You should firstly check your existing responsibilities and commitments, in essence, carrying out an audit of the contracts you currently have in place. This will help you to determine whether to re-procure the same software or service, or if your school’s requirements have changed, this will dictate whether you need to start putting a proposal together for another software package.
Next look to build a business case, this is covered in more detail in our article on putting together a business case for school finance software.
Inform everybody who needs to be involved in procurement early on in the process. You may need to involve governors and trustees who would appreciate being notified at the earliest opportunity as they’re not necessarily based in the school full time. You may also consider technical experts, legal professionals and other external contractors you may need to call upon the expertise of – so make sure their expenses and time are properly budgeted for.
This falls under the business case document, but you will want to conduct an audit and draft a proper specification for any software you require. This should include a description of what service you need, how it meets the school, academy or MAT’s requirements, the quantity of licences needed and what kind of features it includes as well as delivery timescales.
Effective supplier relationship management in financial planning for schools and MATs
A healthy supplier relationship is crucial for effective academy, MAT or school financial planning and budgeting for a multitude of reasons.
Good relationships between suppliers and organisations can lead to lower costs. It’s par for the course in business to negotiate a mutually beneficial price, but clear understanding of a school, academy or MAT’s needs on the provider’s part can ensure the organisation is getting the right budgeting software package and not being oversold. Companies should want to understand what is going to be the right fit for the school, academy or MAT and its staff, and it’s equally important to communicate this well to the supplier so the correct solution is found. Price volatility is also minimised as a good relationship with your supplier means they’re more likely to lock in your subscription fee over a longer term.
Similarly, an active feedback loop with suppliers can improve the software. By speaking to your account manager or customer success team and ensuring your school, academy or MAT’s voice is heard can influence future software development and upgrades to the system – making sure your investment is future proofed and will stand the test of time.
Purchasing software through a procurement tool, has its benefits but its also worthwhile getting quotes from suppliers directly. Using their understanding of the education sector, they can tailor the procurement experience specifically for your academy, school or trust and it’s sometimes easier to manage the relationship directly than use third party procurement solutions.
Liaising directly with suppliers also means they can look at your school academy or MAT’s business needs as a whole and provide you with an integrated solution across school budgets, education finance, HR software for schools as well as payroll. Consolidating the supply chain makes it easier to manage and software solutions that speak to each other seamlessly can improve efficiency and save money.
How do i go about choosing the right procurement tool?
We’ve mentioned the G-Cloud Framework extensively in this article, but there are other means and ways of procuring software which should be explored by your school – one size does not fit all.
Going directly to a supplier, like Access Education for example, can be more efficient in terms of managing supplier relationships as discussed in the last section. An organisation like Access also employs experts who have worked in the education sector for years so understand the challenges school staff face. They can provide the appropriate advice around strategy and help your school, academy or MAT conduct a technical audit to find out what its requirements are. Access is also equipped to deal directly with academies, trusts, LA maintained schools and independent schools and bring their wealth of experience to negotiations with customers.
Everything ICT is also a public sector procurement tool, similar to the G-Cloud Framework which is suitable for ICT hardware and Cloud based services. The framework is fully DfE compliant and provides services to the Welsh Government, local authorities, Multi-Academy Trusts and even the MoD.
