Professional Documents
Culture Documents
YEAR 3: 2007/08
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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Q:\Intranet Masters\financial strategy 2007 08.doc
Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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.
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
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:
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
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
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
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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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
Action: To ensure compliance with the terms of the loan agreement over the life of
the loans
Action: To integrate long-term and short-term cash flow analysis for the Greenwich
Project and recurrent budgets
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.
The college is benefiting from HEFCE Innovation Fund income to support business
development within the College.
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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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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
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.
In addition, the College has developed a Development Strategy and Plan to lever in
philanthropic resources from statutory, commercial and charitable organisations.
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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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
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 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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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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.
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: 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.
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.
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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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
3.1 Communication
The College aims to improve communication of its financial position and future plans
to all stakeholders.
3. 2 Management Information
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.
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.
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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
Action: Overview of Financial Regulations to form part of staff and governor induction
programmes.
The College should seek to provide more accurate and timely information by
creatively exploiting the use of technology.
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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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: Identification of Action Plan to embed risk further down into organisation
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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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
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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Ravensbourne College of Design and Communication
Finance Strategy 2005-2012
Year Three: 2007/2008
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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