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RAVENSBOURNE COLLEGE OF

DESIGN AND COMMUNICATION

FINANCIAL STRATEGY 2005-2012

YEAR 3: 2007/08

Genevieve Cowcher 23/04/2008


Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008

Introduction

The Financial Strategy 2005-2012 is an integrated approach to deliver the College’s mission
and corporate objectives while ensuring the long-term viability of the organisation. It is
reviewed each year as part of the overall planning process. Its purpose is to:

• Set priorities and manage operations that recognise the financial constraints and
opportunities.
• Identification and quantification of future resource needs, including the need for
investment to protect future productivity
• Evaluation of strategic opportunities for collaboration, e-learning and new teaching
methods, and for business development
• Making an integrated response to funding initiatives and opportunities that create long-
term financing implications.
• Management of resources in a manner that satisfies external stakeholders without
damaging the mission and culture of the organisation
• Mitigation of financial loss

Responsibilities

Distinct responsibilities for creating, delivering and monitoring the Financial Strategy reside
with the Governors, the Director, Members of the Senior Management Team, the Director of
Finance and Managers. In addition, Ravensbourne believes that it should communicate the
strategy to key stakeholders, including staff, students and external bodies with an interest in
the institution. To facilitate this process the strategy will be placed on the college intranet.

1. Governors are ultimately responsible for the viability of the College and therefore have a
duty to set the strategic direction and to ensure that the financial strategy is robust and
effective, and that it is properly aligned with the Mission, Corporate Plan all other
strategies and objectives. Detailed scrutiny of the Financial Strategy and Plan is
undertaken by the Finance and General Purposes Committee

2. The Director provides strategic leadership and management to deliver the agreed
objectives and plans

3. The Senior Management Team has a collective responsibility for informing strategic
direction and integrating the various elements into the corporate and the financial plan ,
and an individual and collective responsibility for delivering the agreed objectives

4. The Director of Finance leads the process of developing the financial strategy and
advising on financial issues

5. Managers need to take ownership of the strategic financial issues as they plan and
manage the core activities of the institution.

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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008

The Key Financial Objectives

The College has identified key financial objectives as being central to its Financial Strategy
and Plan. These are as follows:-

1. To develop a robust financial plan which supports the long-term viability of the
college
• To generate year on year, annual revenue surpluses to fund future
investment
• development by active cash management
• To increase and diversify sources of income, ensuring positive net
profitability of all income streams
• To establish an effective control system for major capital investment and
borrowing and in particular to minimise the cost of interim funding for the
Greenwich Development.

2. To ensure cost-effective delivery of the College’s Mission


• Collaborative undertakings
• Value for Money initiatives and the reduction in overhead costs
through improved purchasing techniques
• Improved Resource Planning

3. To improve financial awareness within the College to support the Financial


Strategy and Plan

• To increase openness and develop effective scrutiny of financial


management
• To improve management information and forecasting
• To develop a range of financial performance indicators as part of the
balanced scorecard methodology, which will be monitored to ensure
strong and sustained financial performance in the future

4. Risk management
• To embed risk management further within the College to support the
Financial Strategy and Plan

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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008

1. Developing a Financial Plan which support the Long-term viability of the


College

1.1 The Financial Plan

The College has been in a relatively stable and controlled financial position, with a
history of delivering surpluses and achieving a strong balance sheet with a positive
cash position. The HE sector is now facing a changing environment which demands
institutions to be more proactive academically and financially. It is therefore essential
that we develop a systematic and integrated financial strategy and plan which will
inform and support the over-arching Corporate Plan.

With no endowment income to fall back on, Governors have traditionally followed a
conservative financial strategy with the aim of making small operating surpluses each
year so as to “balance the books” and build-up a small reserve to offset the risk of
unforeseen expenditure. This strategy has enabled the College to maintain capacity
to meet current objectives but was not able to provide the levels of investment to
support the institutional and physical change required for the long-term viability.

As a small specialist institution, Governors are aware that the College needs to
review its role in a changing environment, to ensure that it continues to provide
education that is a high quality, academically robust, and provides students with the
skills relevant to the Creative Industries. Following the fundamental review of
options, the Board decided to undertake a major step change and believes that this is
best secured through the relocation of the College to the Greenwich Peninsula in
2009/10 and collaboration with other HE Institutions.

Relocation releases the equity value of the Chislehurst site (£34m) and enables the
College to invest in facilities that deliver the college’s key strategic objectives. The
Board’s key concern is to lever in a funding package that delivers optimum value, to
ensure both the short and long-term viability of the College.

To support this step-change the College has identified two planning periods:

Period 1: 2005-2009 Strategic Development as precursor to move

Period 2: 2009-2012 Developing the College at Greenwich

A seven year financial forecast covering these periods can be found as


Appendix A.

Action: To set the annual budget and produce accurate monitoring of income and
expenditure to achieve a minimum annual surplus of 2.5%. This surplus is to be
added to balance sheet reserves during planning Period 1 to support the Greenwich
Development and then to re-build the College’s reserves.

Target Annual operating surplus of at least 2.5% for each year of the
plan
Responsible Senior Management Team

1.2 Treasury and Cash Flow Management

Treasury management is about ensuring that you have sufficient cash to pay the bills,
while minimising the cost of temporary borrowing and maximising the return from
holding surplus cash. Typical treasury management activities include:
management of receipts and payments

oversight of borrowing and investments


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Finance Strategy 2005-2012
Year Three: 2007/2008

monitoring of cash flow in general to ensure that liabilities can be met

The College cash management is an important element of the overall strategy. The
cash reserves are an effective income generator and provide flexibility to respond to
Government initiatives when required. The investments should maximise income
whilst ensuring that cash availability matches changing expenditure levels.

A strict but fair policy with regards to debtors has been introduced and this must be
maintained. This policy must be applied in a strictly consistent manner to safeguard
against bad debts and to bring forward the cash collection to improve cash reserves.
The grant income flow is predictable and the college expenditure profile must be
managed to maximise the cash balance at all times to take full advantage of interest
rates.

Action: To produce monthly cash flow forecasts and utilise the most beneficial
investment opportunities and to review the financial market to monitor the
best use of the cash reserves / deficits on a regular basis.

Target Preparation of three month rolling cash flow by the last working
day of the month
Responsible Financial Controller

Action: To minimise cash during the Greenwich Project and reduce financial
processing costs

Target 70% of non-salary payments made by BACS in 2007/08


Responsible Financial Controller

Target Extension of procurement cards use, with roll-out to budget


holders per the Procurement Strategy
Responsible Head of Finance

Target Procedure for collating future commercial, development and


project income to be developed by 1/1/08 to ensure prompt
invoicing
Responsible Head of Finance

Target To improve cash flow through improved debt collection and


monitoring with the aim of achieving x% of receipts within x
days
Responsible Financial Controller

1.3 Banking arrangements and borrowing

The College aims to use its banking services to ensure that funds are securely held
and readily accessible while minimising the cost of borrowing.

The college currently has positive cash balances (£2.4m @ 31/7/07). However, at
the point when the Greenwich Development commences, the college will move into a
deficit position. The college has agreed short-term borrowing of £32m with Barclays
Bank and a working capital loan of £2m

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Year Three: 2007/2008

Action: To ensure compliance with the terms of the loan agreement over the life of
the loans

Action: To complete the loan documentation by autumn 2007.

Action: To integrate long-term and short-term cash flow analysis for the Greenwich
Project and recurrent budgets

Target To achieve or reduce the forecast levels of interest payable in


2007/08
Responsible Director of Finance

1.4 Diversity of Income

The College should seek to reduce its dependence upon Government funding by
sourcing alternative income streams. The reliance on a single income source causes
some business risk. With increasing commercial awareness the College should look
to generate income from its resources provided that it does not adversely affect the
core business. Income targets will be embedded throughout the organisation. Typical
sources of income will be Government departments and agencies (including HEFCE
Special Initiative Funds), Trusts and Charities, the European Commission, personal
philanthropy and commercial sponsorship.

Commercial Development Targets

The college is benefiting from HEFCE Innovation Fund income to support business
development within the College.

Action: The Enterprise and Innovation Team will prepare a comprehensive


Commercial Development Plan. Financial Targets will be consolidated into
the College financial plan as a net income generator.

Target To achieve net profit target as identified in the Commercial Plan


(Annex A)
Responsible Head of Enterprise and Innovation

Student Fees strategy

From 2007, Ravensbourne will be able to charge fees for Home and EU students up
to a value of £3,070 pa. The College has decided to offer a variable fee structure
against type of course.

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Year Three: 2007/2008

COST OF STUDY AT RAVENSBOURNE : 2007-2008 Home and EU students

COURSE TYPE COST OF STUDY PER LENGTH OF


YEAR TUITION PER YEAR
ABC Level 3 Diploma in
Foundation Studies (Art
and Design)

Under 19 years of age £zero 35 weeks tuition

19 years of age or older £900


Two year BA
£3,070 45 weeks tuition
Three year BA/BSc
Year 1 and 2 £3,070 30 weeks tuition

Year 3 £1,125 + Levy


Five year part time £1,800 30 weeks part time
BA/BSc
Two year Foundation £2,660 30 weeks tuition
Degree
One year ‘Level Zero’ £1,200 30 weeks tuition
One year ‘Top up’ £3,070 45 weeks tuition
BA/BSc

Students from outside the EU will have to pay fees at a higher rate. This are
listed on a yearly basis in the College prospectus and on the College web pages

Bursaries and Other Financial Support

College will set aside 20% of the incremental fee increase for 2007/08 to offer
additional financial support from fees, to students who apply through the College
bursary system. All bursaries in table below are new and developed within the
framework of OFFA.

Increased funding through sponsorship and fundraising

The College is developing its mainstream sponsorship capabilities. This work is


embedded within the Faculties and will focus on industry collaboration.

Target To achieve Faculty sponsorship of £75k in 2007/08


Responsible Heads of Faculty

In addition, the College has developed a Development Strategy and Plan to lever in
philanthropic resources from statutory, commercial and charitable organisations.

Action: The Development Office will prepare a comprehensive Philanthropic


Development Plan and Financial Forecast. Financial Targets will be
consolidated into the College financial plan on a cost recovery basis.

Target To achieve philanthropic income as detailed in the


Development Plan (Annex B)
Responsible Head of Development

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Funding Council Financial Initiatives

The College seeks to engage with HEFCE special funding agenda and will measure
its success through the outcomes of the bidding process. In addition, this process
supports the development the College’s reputation and can allow projects to be
successfully achieved, which could not otherwise be afforded.

Action: the College should actively review every funding opportunity and enter bids for
all relevant funds.

Action: Develop bidding process to ensure that all relevant costs are included and
that lifecycle costs are identified to ensure that projects can be supported on
an on-going basis where appropriate.

Target To achieve a 50% success rate for HEFCE special funding bids
Responsible Director of Post-Graduate and Innovation

External Income to Support Academic and Knowledge Transfer Objectives

The College seeks to secure income from non-HEFCE sources to support core
academic and knowledge transfer objectives. Typical funding sources will include
Government departments and agencies, Trusts and Charities and the European
Commission. In addition to increasing the resources available to support core areas
of the institution’s business, success in securing external funding will provide an
important measure of the institution’s engagement with the wider social and economic
agenda.

Action: Develop and implement a policy framework designed to support external


income generation.

Action: Develop a control framework which covers costing and pricing, approvals for
funding applications, post-award monitoring systems and approvals for grant claims
from funding bodies.

Target TBA
Responsible Director of Post-Graduate and Innovation

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2. To ensure cost-effective delivery of the College’s Mission

2.1 Collaborative Undertakings

The College should seek to take advantage of any collaborative ventures to enhance
its financial resource. The use of best practice should improve financial regulations or
procedures or to investigate changes to systems.

Action: To establish strong, non-competitive relationships between Institutions and


benchmark key business practices. To take advantage of any economies of
scale generated by collaboration initiatives such as the London Universities
Purchasing Consortium (LUPC)

Target Increase of 3% per annum of non-staff costs sourced from


collaborative procurement
Responsible Procurement Champion

2.2 Value for Money

The College should establish and constantly review its three year value for money
programme to ensure that the College gains best value for money from all college
activities.

Action: To improve procurement within the College as identified in the Procurement


Strategy

Action: All college activities should be reviewed as the culture of the college and
demands of the strategic plan change. Priorities for the work should be
reviewed on a regular basis and milestones recorded to chart the progress
made.
Action: Value for Money Reviews should be programmed and agreed by the Audit
Committee each year.

Target To achieve savings of 1% of recurrent expenditure


Responsible Director of Finance

2.3 Resource planning

Resource planning is critical for the success of the College. To support this role the
College has taken the decision to recruit an Interim Head of Resources to support the
Director of Resources.

Action: The College will be creating a resource plan which


• seeks to benchmark the use of our physical resources
• identifies the whole life costs of assets and performance of assets

Target Resource plan created for implementation 1/8/08


Responsible Interim Head of Resources

2.4 Capital Project

Control of the Greenwich Project is a paramount priority for the College. The project
will be managed in a transparent manner with clearly identified project responsibility
supported by timely management information.

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Action: Monthly financial reports on relocation issues to be prepared for key


stakeholders

Target Financial analysis and response plans to be prepared and


distributed by the 20th of each month
Responsible Director of Finance

Target Deliver Greenwich project to budget


Responsible Project Manager, Director of Transition and
Director of Finance

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3. To improve financial awareness with the College to support the Financial


Strategy and Plan

3.1 Communication

The College aims to improve communication of its financial position and future plans
to all stakeholders.

Action: To utilise the College intranet to improve financial reporting

Target Implementation of Quarterly Finance Update for staff and


students for 2007/08
Responsible Director of Finance

Target Publication of Financial Statements on the College website


within two weeks of approval by the Board of Governors
Responsible Director of Finance

3. 2 Management Information

The Finance department has a responsibility to produce timely and accurate


statistical and financial management information. This information is crucial to the
decision making process and must allow the Governors and Senior Management to
make informed commercial decisions to safeguard to Institution. The information
must include an effective and workable set of financial regulations.

Action: Production of range of management information, including management pack


and detailed information for Budget Centre Managers on a monthly basis and
quarterly Board reporting pack.

Target Information to be distributed by the 15th of each month


Responsible Head of Finance

A robust costing and pricing model is required to allow financial comparisons between
Courses to be made. This will inform Management of relative data when looking at
future course size and resource allocations. Management information must be used
to set pricing and ensure that all courses are funded in accordance with agreed
resource allocations.

Action: Review of costing and resource allocation model

Target Completed for 21/12/07


Responsible Interim Head of Resources and Head of Finance

3.3 Financial Regulation

The financial regulations must be kept up to date and be approved by the internal
auditors. Each budget holder is to sign for receipt and understanding of the complete
financial regulations and this must include any changes to staff with in the year. Staff
are also to be trained as necessary on basic financial controls to safeguard against
fraud, overspends or other breaches of the regulations.

Action: Financial Regulations to be reviewed and changes approved by the Board on


an annual basis. Regulations to be distributed to all Budget Centre Managers
and made available to staff on the intranet.

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Year Three: 2007/2008

Target Revisions to Regulations and Procedures to be published within


two weeks of approval by the Board
Responsible Director of Finance

Action: Overview of Financial Regulations to form part of staff and governor induction
programmes.

Target 100% of new starters to be trained in 2007/08


Responsible Director of Finance

Action: Development of Financial Training Programme for middle and senior


managers

Target To be developed for implementation in 2008/09


Responsible Director of Finance

3.4 Technology in Finance

The College should seek to provide more accurate and timely information by
creatively exploiting the use of technology.

Action: Technology should be used to move from manually generated information


system to a live computer based system wherever possible. Financial
information should be made available to employees wherever it can improve
their ability to perform their role. Spend versus budget information should be
available to budget holders through live data wherever possible

Target Roll-out of web-based general ledger to budget centre


managers for go-live 1/1/08
Responsible Director of Finance

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4 Risk Management

4.1 The Board and Senior Management Team are currently establishing the necessary
processes to comply with the recommendations of the Turnbull Committee. As part of
this process the College has implemented a risk register which is reviewed by senior
management on a quarterly basis and reviewed by the Audit Committee and Board
on a regular basis.

Action: senior management will review and update the risk register on a quarterly
basis for onward review and input by the Audit Committee, Finance and
General Purposes, and Board.

Action: Risk owners will develop action plans to manage these risks more effectively,
with lapsed dates
Target On-going
Responsible Director of Finance

Action: Annual Governor’s risk workshop to ensure ownership by Board and to


stimulate external viewpoints on risk facing the College

Target Format and date to be agreed by Board for Autumn Awayday


Responsible Director of Finance

Action: Identification of Action Plan to embed risk further down into organisation

Target Faculty risk registers and action plans to be in place by 31/7/08


Responsible Heads of Faculty

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SUMMARY OF TARGETS
TARGET PERSON RESPONSIBLE EVIDENCE

Annual operating surplus of at least 2.5% for each Senior Management Committee Operating surplus as shown in the 2007/08 Financial Statements
year of the plan

Preparation of three month rolling cash flow by the Financial Controller Cash Flow approved by Director of Finance and summary information
last working day of the month included in the Project Update

70% of payments made by BACS in 2007/2008 Financial Controller Statistics on BACS/ cheque payment

Extension of procurement cards with roll-out to budget Head of Finance Numbers of cards issued
holders per the Procurement Strategy

To improve cash flow through improved debt Financial Controller Systems analysis
collection and monitoring with the aim of achieving x%
of receipts within 30 days

To achieve or reduce the forecast levels of interest Director of Finance Actual interest charge
payable in 2007/2008

To achieve net profit target as identified in the Head of Enterprise and Innovation Commercial surplus as identified in the 2007/08 Financial Statements of
Commercial Plan Ravensbourne Limited

To achieve Faculty sponsorship of £75k in 2007/2008 Heads of Faculty 2007/08 Financial Statements

To achieve philanthropic income as detailed in the Head of Development Summary of agreed projects/ donations
Development Plan (Annex B)

To achieve HEFCE special funding of £500k pa Director of Post-Graduate and Summary of agreed funding

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Innovation

Development of costing and pricing framework for Head of Enterprise and Innovation/ Framework approved by Commercial Development Committee by 31/8/08
statutory bids Head of Finance

Increase of 3% per annum of non-staff costs sourced Procurement Champion Procurement Analysis
from collaborative procurement

To achieve savings of 1% of non-staff expenditure per Director of Finance Procurement Analysis


annum

Whole life costing of new assets Director of Finance Capital and project planning information

Greenwich Project - financial analysis and response Director of Finance Documented performance
th
plans prepared and distributed by the 20 of each
month

Greenwich Project – On-going delivery of project to Project Manager. Internal Project Financial Statements 2007/08
budget Manager and Director of Finance

Implementation of quarterly financial update for staff Director of Finance Wiki file history
and students on Wiki

Publication of financial statements and financial Director of Finance Wiki file history
strategy on the College intranet within two weeks of
their approval by the Board of Governors
th
Management Accounts to be distributed by the 15 of Head of Finance Documented performance
each month

Review of costing and resource allocation model Head of Finance, Interim Head of Date analysis approved by management committee

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Resources, Senior Quality Officer

Revisions to Financial Regulations and Financial Director of Finance Wiki file history
Procedures to be published within two weeks of
approval by the Board

Overview of Financial Regulations to form part of staff Director of Finance Staff training records
and governor induction

Development of financial training programme for Director of Finance Materials on line for 1/1/08 and included in 2008 staff development
middle and senior managers programme

Roll-out of web-based general ledger to budget centre Director of Finance List of managers with access
managers for go-live 1/1/08

Risk owners to develop action plans to manage their Director of Finance Copies of action plans held as part of central resource
risks more effectively

Annual Governor’s risk workshop to be held as part of Director of Finance Minutes of Board of Governors meetings
the Board Away Day

Faculty risk registers and action plans to be in place Heads of Faculty Copies of risk registers held as part of central resource
by 31/7/08

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