This is a difficult time to be the chief financial officer (CFO) at a college. Declining student enrollment and the pandemic’s pressure on state budgets have cut institutions’ revenues, but raising tuition to offset losses isn’t practical because many Americans are questioning the value of a traditional higher education.
On the other side of the ledger, as CFOs look to control costs across the institution, they face new challenges and are being pushed to transform their roles at their institutions. Overall, CFOs are being encouraged to become better storytellers at their institution by relaying important and complex information about the organization’s performance through digestible, relatable messages. The struggle is translating financial and operational jargon into language that stakeholders across the institution can understand and leverage to make data-driven decisions for the good of the institution.
Technology can be a boon for CFOs in this arena as new forms of data analytics and visualization tools become available, which can simplify the process of turning complex information into digestible content. Using dashboards with their ERP systems, for example, CFOs can better communicate and tell a consistent story of their institution’s financial health without bogging down the audience with complicated facts, figures, and ratios that can cause individuals from different departments or areas of expertise to lose focus.
Finding the Data
In an ironic twist, college campuses are often great places for learning how to use new technologies in the classroom, even when the institution is harboring outdated or legacy information systems internally. Often, departments across campus use different reporting tools that house data sets that differ from those within student information systems (SIS), for example. Trying to access all that data across different departments is time-consuming and can cause some information to get lost in the translation. This can lead to inconsistent or incomplete views of the institution’s financial health.
In many cases, the CFO turns out to be the unsung hero if they can overcome the myriad obstacles of tying together disparate systems and consolidating campus-wide data. Cloud-based ERP systems can help CFOs mitigate these challenges by offering a single and unified view of the campus’ financial information. A modern ERP system can bring together the SIS, administration software, HR resources, and financial management applications into a single package.
A World of Complicated Finances
Even if all financial data in one place, making sense of it can be difficult. University finances can be incredibly complicated. For CFOs to understand their institution’s financial health, all the financial information needs to be gathered and made accessible through a single repository. This can be done using modern technology, like a cloud-based ERP system. Still, it doesn’t alleviate every issue for CFOs.
Today, accurate revenue forecasting is becoming more difficult because the number of high school students applying to college is dropping. At some institutions, lost tuition-based revenues from the traditional four-year students can be offset by introducing new academic programs that target working adults interested in switching careers or obtaining new skills to aid them in their current job. In other instances, institutions may need to better understand their finances to identify areas where investments can be scaled back. All of this can and should be supported by data presented by CFOs and their teams.
Show Me the Money
CFOs are tasked with taking institutional data and presenting it in a format that all stakeholders easily understand. While CFOs may be comfortable using the Composite Financial Index (CFI) to talk about an institution’s financial pressures, a large section of the university’s stakeholders may not easily understand it. Complicating matters even more, the process of calculating an institution’s CFI is often done infrequently and manually, which leaves room for inaccuracies and human error. As a result, some CFOs rely on auditors or other third-party groups to calculate CFIs and other key performance indicators that can underscore an institution’s financial health—at an additional cost, of course. Similarly, other key metrics of a university’s financial health, such as net operating revenues, asset performance, and liquidity, might be virtually incomprehensible to a person who has not studied finance.
Poorly or incompletely understood data makes it difficult for stakeholders to make informed choices about protecting the institution. One way to make it easier for boards other institutional leaders to comprehend financial data is for the CFO to present findings using highly visual dashboards. The simplified visual representation of the institution’s financial health makes it easy for all stakeholders to grasp information. It also lends itself nicely to a narrative, which CFOs can use to tell a compelling, understandable story. A modern ERP system can support these initiatives.
Creating easily read charts and graphics is significantly easier for CFOs when they have an ERP system that houses all the data and supports the functionality to present complicated information in a simplified view. Additionally, a modern ERP solution can look beyond what is happening specifically on a CFO’s campus and provide insight into industry best practices and benchmarks against industry or market-specific norms. This allows CFOs better convey how their institution stacks up against other campuses.
Getting on the Same Page
Every stakeholder at an institution should have access to the same data and metrics that will allow them to drive institutional and student success and advance the institution’s reputation. However, not everyone may agree on how to achieve those goals. This can be especially tricky when discussing how to apply limited finances to new programs that might draw new revenues or reduce funds for programs with declining enrollment. These are not easy decisions for institutions to make, as they impact the institution’s long-term health and viability. Still, the process can be made easier when CFOs can translate accurate data and ensure that everyone understands critical financial metrics.
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