Partner success story: Cost efficiency and spend control for academies of all sizes

ApprovalMax_Blog_Thorne Widgery_Success Story

Thorne Widgery is a progressive firm of chartered accountants and business advisers based in Herefordshire, West Midlands. The firm boasts a number of industry specialisms, a key one being the Education Sector. 

Apart from traditional accounting, Thorne Widgery also has an “Innovation Team”. Their role is to assess the rapidly developing software market, with a view to assisting clients to get the best out of their systems.

The Innovation Team has even written its own apps specifically for the Education and Accountancy Sectors. The upshot of this is that TW delivers app advisory services and business process management solutions, not only to its own clients but also, almost uniquely, to other accountancy practices across the UK. 

Throughout its 70-year history, Thorne Widgery has often had a strong focus on the road ahead. In this interview, we are going to find out what future they see for accounting services in the education sector.

Sam King ACCA FMAAT, Head of Xero & Xero for Education, Thorne Widgery Chartered Accountants

What kind of education providers are you working with?

We serve a number of various sized academies and multi academy trusts (MATs) around the Country, having initially built a strong base in Herefordshire. With efficiency in mind, our ideal customer would be a MAT with 6 to 12 schools. That said, some of our clients are single-academy trusts with just one school, whilst at the other end of the spectrum, we have recently we completed an implementation for a 20-school MAT. In almost every case, the initial dialogue is with the school business manager, finance director or somebody along these lines – the person who is in charge of finances for that school or trust.

From your experience, are academies a very traditional environment or do they embrace modern technologies? 

Well, they often still have pretty dated (and that unfortunately means inefficient) systems and processes, but we’re at hand to help them move on. It’s not unusual for a head teacher to insist on personally signing things off on paper documents because that’s how it’s always been. However, as head teachers are notoriously difficult to get a hold of, supplier payments often get delayed. This is where Thorne Widgery comes in to help academies become more efficient and effective with their finances; to change the habit of a lifetime, supported by a transparent and easy-to-use finance system. Implementing Xero with a number of complementing apps does improve overall efficiency and those in charge of the academy finances can see that. There’s another major advantage for multi-academy trusts: it means they don’t need to travel from site to site anymore just to review and approve on paper. So despite people in the education sector being quite old-fashioned, they do acknowledge the benefits of cloud accounting and are open to breaking new ground.

Looks like you’re solving this old-school inefficiency! What other sector-specific challenges are you dealing with?

Well, value for money is really important for academy schools – whatever the purchase. Yet, who they buy from actually depends on who’s doing the ordering. Glue sticks, for example, are a big thing in schools. Depending on the terms and conditions for other supplies that are needed, it might be best though to buy glue sticks from a certain supplier even if they are more expensive there. That’s why it’s critical to have an approval workflow that takes into account details such as this. To get the best overall value. 

Best value for money is also vital for academy trusts when it comes to the accounting solution, isn’t it?

Exactly. Let’s take a 10-school trust for example. If we offer a whole ecosystem, we call it XfE – Xero for Education, set up costs, to include training and their first 12 months support, come in at no more than £2,500 per school with licence costs of no more than £100 per month, per school. We’ve emphasised the “no more” as the client only pays for what they want/need, meaning we regularly charge less. 

This compares favourably, sometimes hugely so, with some of the figures quoted by other providers in the same space, particularly on set up where we can be thousands and sometimes tens of thousands of pounds cheaper, depending on the size of the school or MAT, that’s a massive price difference. Academies are always on very tight budgets because, like in other areas of the Public Sector, Government is often trying to limit budgets. In the past our claims have been greeted sceptically; there was disbelief that we could deliver everything that we promised at the price we quoted, such was the disparity on price in the marketplace. Since we have started gaining greater traction, word of mouth has started to do its thing, and now schools are contacting us. The schools that we work with really appreciate our modern, intuitive system and a very affordable price.

Can you tell us more about XfE?

Sure. XfE is an app stack in which we combine the best-of-breed tools that we selected after having explored the needs of schools regarding their finance function. This ecosystem includes Xero, ApprovalMax and a budget tracker that we have developed. We call it XfE because schools quite like the concept of a one-stop shop. If we present our solution this way and say that ApprovalMax is the approval module, rather than calling it another app to enhance Xero, it’s easier for them to understand. 

How does spend control work? Do you set up standard processes for all your clients?

No, we don’t do “one size fits all”. All schools are different, and a lot depends on the individual authorisation levels the trust’s board has put in place, usually specifying that “requests have to go through this or that process”. For example: invoices up to 10 thousand pounds can be signed off by the business manager, those between 10 and 25 thousand pounds have to be authorised by the school board, and all above 25 thousand pounds must have the trust board’s approval as well. Rules and regulations are very rigid and present in every school. These are generally very similar but tend to have different thresholds, depending on who’s approving and how experienced they are. 

Approvers can always redirect an invoice to the next level for reassurance because it is much easier to make corrections at that point, before it’s been posted to Xero as approved and ready for payment. We want to set up the right process, so sometimes additional steps are necessary to ensure that a particular person can do a review in the next step. 

How does this work for a multi-academy trust (MAT)?

Historically, schools in a MAT used to have separate finance systems and separate staff. It was basically all run on a separate entity basis. These days, more and more MATs are looking to capitalise on economies of scale with many centralising their finance department and having just one finance system and one finance manager or a smaller finance team. The centralised finance model means that they need only one Xero data set, further reducing costs, but, importantly, without compromising on functionality or control.  By using different tracking categories for different schools, which also works perfectly with ApprovalMax, we can provide great value for money, and brilliant reporting.

How do you work out the specifics for the workflow? Do you get together with the board or the school’s business manager and then set up a customised workflow with them every time?

It’s done on a case-by-case basis and our consultant does come in for that. Sometimes we’re challenging them by asking if they really need all the steps they intend to have. However, all academies are obliged to share their documented approval workflow as part of the audit pocess and it has to be signed or approved by a particular person. So, we take what they’ve got and then go from there.

Do they prefer mobile or web apps for purchase order creation?

It’s predominantly the web version that schools use because the staff don’t like having work-related things on their phones. But we do have a couple of schools whose head teachers have downloaded the app for making approvals. Purchase order creation is mostly performed in the web application though. Approvals are more driven by the app, I would say.

Are audits a big part of your offering for academies? And is this an area that can easily be automated?

Yes, academies are legally required to have their accounts audited once a year by independent registered auditors. And this is where we get a lot of attention. Lots of accounting firms see what we’re doing and that it really works for schools. There is a very detailed audit trail enclosed and I can’t stress enough how valuable this attachment is as it records who approved what and when, and whether there are any related notes or comments. The audit trail feature is also great for us as auditors. Before ApprovalMax, I had to go to primary schools and sit on a primary school chair to do this work – and I’m 6 foot tall. Now it’s all online and I can do it from the comfort of my office. It’s also much easier to schedule our work. We do a lot of interim testing and now it can be done anytime. It is such a good solution for both auditors and accountants, and highly transparent. 

In conclusion, what are the main benefits of having streamlined automated workflows in the education sector?

Firstly, one key benefit is that we’re giving back control to the client, and it is now crystal clear who does what, when. Ultimately, the process is so much slicker because the client is controlling it. It’s not as rigid as it was before and really easy to understand.

Secondly – and we actually take that for granted now – we have cloud-based processes, so it’s always possible to have a look at things while on the go. I think we all tend to forget about it nowadays but the fact that it’s all cloud-based cannot be underestimated. 

Thirdly, value for money can only be achieved by implementing efficient and transparent workflows. They deliver accurate finance data, show where money has been spent and where there’s room for improvement, and control who can purchase what from which supplier. So, in my opinion, it’s high time for the education sector to stop using those outdated paper-based processes.