The increasing cost of college education isn’t lost on parents of students nor on the recent graduates themselves as they enter a less-than-promising job market burdened with student debt. But the recession also has created financial pressures for colleges and universities, according to a recent article on CFO.com, the online home of CFO Magazine.
Now, a new breed of college CFO is helping institutions do more with less, using a variety of strategies, including expense management.
Shrinking university endowments and state funding cuts have contributed to rising debt and expenses while enrollment has decreased. The colleges profiled in the CFO.com article demonstrated several strategies for controlling expenses. Here are three of the top strategies.
- Identify and negotiate with preferred vendors. A few years ago, Ohio State University was purchasing 280 varieties of branded pens from dozens of different vendors, according to Geoff Chatas, senior vice president and CFO. By switching to one office-supply contract and one overnight shipper (UPS), Chatas says the university saves $1 million annually in procurement expenses. “We’ve also signed similar contracts with other vendors and service providers,” he says, “adding up to $30 million in annual savings.” An automated expense policy and expense management software can help organizations identify opportunities for preferred vendor relationships and negotiate more cost-effective travel options. These tools provide greater data transparency, which also helps managers spot errors or malicious fraud earlier and improve spending guidelines.
- Require written justification and timing for large expenses. At Boston’s Simmons College, all budget managers must provide written justification and payment timing for all requests for expenses of $5,000 or more. These simple changes helped Simmons College show marked increases in both their finances and administration. The key is changing the culture and making sure that “everyone was focused on cash flow — cash walking in the door and out the door,” says Stefano Falconi, senior vice president and CFO.
- Focus on sustainable change over short-term cost-cutting. The Georgia Institute of Technology employs several strategies to meet post-recession challenges. It has outsourced many services, including campus dining and maintenance tasks, initiated energy-savings projects, and invested in computing infrastructure.
“I didn’t want this to be a situation of merely cutting expenses,” CFO Steven Swant says, “but an entirely new way of thinking about how to operate the school. We now have a process to relentlessly pursue institutional effectiveness.”
The recession has made expense report software a priority for all kinds of organizations. Which of these three tactics from college CFOs is most relevant to your company?
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.