Academies: apply for advances of funding
Academies can request funding advances for support in exceptional circumstances. This guide details how requests are made and processed.
Introduction
Academies might occasionally experience short-term negative cash flows. In these circumstances you can request an advance of funding from Education Funding Agency (EFA) to cover revenue and relevant capital costs.
EFA pays funding advances in monthly installments at a value sufficient to meet cash flow needs. EFA can arrange for payments to be made sooner than this to meet urgent needs.
Who this guide is for
This guide applies to academies, which are public sector, statutory corporations funded by EFA through grant-in-aid or equivalent.
EFA also funds local authorities, businesses and private sector charities but is not responsible for their solvency. EFA will consider advancing funds to them where it is necessary to protect the interests of learners, for example, to secure alternative learning provision. EFA may make emergency payments to business and private sector charities if there has been a payment error.
How to apply
You should contact EFA as soon as you identify that your academy or organisation may need an advance of funding.
You must submit a written request, signed by your accounting officer, which sets out:
- the circumstances leading to the request
- the sums needed and dates required
- a schedule of dates and sums for repayment of the advance, as soon as cash flow permits, but no later than the end of the financial year
The request should also include:
- latest management accounts, including income and expenditure account forecasts, and balance sheet projections
- monthly cash flow forecasts to the academic year end, following the proposed date of final repayment of the advance, showing timings of major cash receipts and payments
Submit your request at least 10 working days before the advance needs to be received. This will allow sufficient time for review and processing.
EFA questions
Contact form https://form.education...
For schools, local authorities, other education institutions and providers, accountants, auditors and other professional advisers with queries for the Education Funding Agency
EFA approval process
EFA will review requests for advances of funding to ensure they are appropriate and the conditions can be met.
EFA will only advance funding to meet an immediate cash need and will only advance the minimum sum necessary. EFA will not advance funding to meet academies’ expenditure if the expenditure can be deferred.
Where the timing of cash flows is particularly critical we may request an analysis of all or part of the cash flow forecast to a weekly level. EFA may ask to see longer-term financial projections as part of the review process.
Where EFA gives approval for a funding advance, we will confirm the terms and conditions. The accounting officer should accept them within 3 working days.
Requests for advances of funding may lead to a re-assessment of the academy’s financial management and control arrangements. This reassessment could lead to EFA formally intervening to secure improvements in to these areas.
Conditions of advances
EFA will pay advances of funding in accordance with a demonstrated need to use the advance to remain solvent. A mutually agreed schedule of repayment will be included as a condition of funding.
EFA may impose further conditions as appropriate to safeguard public funds. For example, you may be required to submit management accounts and consult with EFA before committing to new expenditure above a certain sum.
Repayments
Advances of funding must be repaid according to the agreed schedule. You should inform EFA as soon as possible if the agreed schedule cannot be met.
The longest possible period for an advance is 12 months, but an advance of this duration will be by rare exception. We cannot normally advance funding for longer than this, as such Iong-term advances of funding may constitute a loan.
Repayments are made by reducing the value of 1 or more profiled monthly payments.
On rare occasions, academies may experience negative cash flow arising from operating deficits. This can result in an inability to repay any advance within a reasonable period. In this case a request for deficit funding might be more appropriate.
Accounting for advances
An advance of funding is not an additional grant to an academy or organisation.
You should reflect an advance as a liability on your balance sheet and as a cash movement, rather than income, in management accounts and cash flow forecasts.
Emergency or disaster support
If an academy or organisation suffers catastrophic loss or destruction and needs immediate cash support, we will waive the normal procedures.
An email or telephone request from the principal or most senior available manager can secure same-day transfers if the request is made before 10am.
EFA questions
Contact form https://form.education...
For schools, local authorities, other education institutions and providers, accountants, auditors and other professional advisers with queries for the Education Funding Agency