Why finance teams need to start year-end reporting now

Every summer, college finance teams enter one of the busiest periods of their year, one that has traditionally been a finance and accounting exercise; but year-end is changing.

The College Financial Forecasting Return (CFFR) now enables colleges and the Department for Education (DfE) to take a “real-time and predictive approach” to financial management. This presents a wider shift in finance’s role within a college. Instead of relying on retrospective reporting, finance teams are expected to improve the way they analyse data and provide timely financial insights throughout the year.

What’s changing and how does data enter the picture?

Recent regulatory developments, including the updated Further and Higher Education Statement of Recommended Practice (FEHE SORP), now place more emphasis on key processes, such as revenue recognition and lease accounting. While these changes may appear to be solely finance challenges, they actually highlight something that is fundamental to all departments across a college: accurate, accessible data.

Let’s look at lease accounting as an example. The process relies on reliable records of lease terms, payments, and asset values. Conversely, to successfully recognise revenue, college finance teams need accurate information about contracts, performance obligations, and income recognition schedules.

So, although these are two separate processes, finance teams can’t complete either process confidently if information is siloed across spreadsheets or disconnected systems. That’s because data for one process always feeds into data for another.

This disconnect creates a few key problems. Firstly, finance teams often spend weeks reconciling data before reporting can begin. Secondly, due to the long reconciliation period, finance has less time to analyse results and support strategic decision-making. And, thirdly, as a result of the delays in reconciliation, reporting, and analysis, college leadership may need to make decisions based on incomplete or outdated information.

Not only does this represent a compliance risk, but it also means that strategically, the college is making important decisions without a complete picture of its performance.

Why preparation needs to begin now

Although most colleges won’t apply the updated FEHE SORP until their financial statements for accounting periods ending in July 2027, advisers consistently recommend beginning preparations now.

Crucially, this preparation focuses on understanding whether existing processes and systems can provide the information that finance needs when year-end arrives and not on learning new accounting treatments.

Industry experts also advise colleges to begin reviewing processes now rather than waiting for closing deadlines to approach. To begin your review, consider asking questions like:  

• Can we trust the data used to produce statutory reports and management accounts?
• How much of our reporting depends on spreadsheets or manual reconciliation?
• Which department owns the information needed for revenue recognition and lease accounting?
• Are finance, estates, payroll, and operational teams working from the same data, or are we siloed across systems?

Starting the review process now will help to reduce pressure later and allow you to identify where processes can be strengthened before the first year-end under the new requirements.

Cross-departmental collaboration is critical to a smooth year-end

One of the biggest challenges facing colleges is that year-end reporting is no longer finance’s sole responsibility.

Revenue recognition typically requires information from curriculum or commercial teams, and lease accounting often depends on estates data. Plus, processes like budgeting and forecasting need input from all department leaders and senior management.

Where departments maintain separate versions of the same data, financial reporting becomes slower because finance is forced to spend weeks reconciling and correcting data. As a result, confidence in the final accounts drops, and delays keep occurring.

By contrast, colleges that work consistently across departments are better placed to respond to changing reporting requirements, like the FEHE SORP, without significantly increasing workload.

Ultimately, successful year-end reporting will become more and more dependent on the decisions made months beforehand. These decisions, albeit around collaboration, clearer reporting, or connecting disparate business systems, prepare college finance teams to tackle next year-end and wider regulatory changes with skill.

Sam Dodge is the Solutions Manager at Xledger UK  

Working alongside UK colleges, we’ve found that stronger reporting processes and improved data quality consistently help finance teams to build confident year-end foundations. Reach out to learn how Xledger supports colleges to stay compliant and streamline financial management.