Simon Winter from Morgan Hunt welcomed 30 Finance Directors, Vice Principals and Directors from colleges across the UK on Thursday 30th November 2017.
Even with the cold weather and a hint of snow it didn’t stop our first Senior Finance seminar in our London offices. The topic of the seminar was understanding the ESFA Transactions Unit (TU) with ESFA’s Matt Atkinson, Director of the Unit as our guest speaker.
The TU has proved a challenge to negotiate for many colleges since its inception and this was an opportunity for our attendees to improve their understanding of the TU process. Additionally, the seminar was an opportunity to share and improve knowledge, network and provide ideas for senior finance professionals on how their financial model should look when applying for funds.
The TU provides restructuring facility monies for colleges and is a port of call for colleges that are not able to secure funds from the commercial market.
In order for the Transactions Unit to undertake an assessment, there is a specific requirement for colleges to complete a financial model similar in feel to the models that commercial lenders such as banks would use.
Colleges should keep in mind the key criteria that the TU expect to be demonstrable is analysis and planning around the following:
Market: Are you aware of your market? What courses do students want in the area your college operates? are you offering courses that leads to jobs and careers? The TU feel that the most successful colleges sell careers via their courses.
Do the courses you offer lead to jobs in the local market place? It is important to be engaged with the local market place to make sure that you are offering the courses that local employers want their potential employees to have on their CV’s.
Curriculum: Is your curriculum successful? Is it offering the students the courses they want that ultimately lead to jobs? Are you utilising your teaching staff, what is the gross margin by course?
Will the course you offer be feasible in 12 months, 18 months or 3 years’ time. Is it cost-effective?
Teaching: Are you fully utilising your staff? Do you have a problem retaining quality staff and if so, do you know why and what you can do to resolve these issues?
Estates: The average college overall utilisation of its estate is 33%, which is well under the benchmark for the sector (44%). but if that space is not being utilised what are you doing to utilise it? Selling or hiring out/leasing some of that space is beneficial for colleges.
The TU will expect you to be able to demonstrate that you have a plan in place. Do you plan to sell some of the estate or hire it out?
It is highly likely that the special FE Sector insolvency regime will come into place in 2019 so it is important for colleges to have strong academic and financial leadership in place.
Business planning is paramount to success and colleges that are exploring long term financial planning are best placed for success. The financial model that the TU are asking colleges to complete is detailed and very commercial in approach.
Thus, colleges that have a balanced senior management team with situational experience from within the sector and outside will be best placed to adapt to the new regime and have the commercial experience to adapt to a changing sector.
In conclusion, it is important for all colleges to be aware of the insolvency regime even if they are not going through a restructure or in poor financial health.
Savvy Finance Directors will be aware of all their options and all of the lenders who are available should they have a need either in their current role or in future roles within the sector.
After our seminar, we found that 92% of our attendees understood the Transactions Unit better. 100% of attendees were more aware of all their financial and restructuring options post seminar.