Getting Schooled In Expense Management

Mention B2B and supply chains and it may be that the most readily conjured imagery focuses on manufacturing or cross-border transactions or bulk orders of everything from nails to paper.

But any business can find efficiencies in how they get the tangible products they need to function, and one area that is ripe for innovation between technology and cost-cutting is education, and specifically parochial education.

In an interview with PYMNTS, Dennis Toohey, principal of Xperience Inc., a procurement consulting firm based in and focused on the Bay area, said “a perfect storm” has arisen in the decades since World War II, resulting in a “dramatic change in the demographics for parochial education” with a significant decrease in the population that would be traditionally fill those school halls, and simply a matter of there being “fewer kids” in the population to take the place of graduating students.

In fact, government statistics show that there will be a declining number of high school age students in the United States through 2024, by as much as 6 percent from levels seen at present. Toohey told PYMNTS that private enrollment in faith-based secondary schools may decline from 1.36 million students to under 1 million within that timeframe. And, as with so many other things in life, tuition costs – and the expenses of running the schools themselves – have been on the rise.

That should be sobering news for Catholic private schools, which, as Toohey maintained, are increasingly being run by people with less experience than might be optimal when it comes to running a small business that really isn’t so small. And yet it remains crucial to keep an eye on expenses, with potentially thousands of items — from pens to books to line items such as salaries — to monitor and a budget against which to track them.

Roughly 20 to 25 percent of expenses tied up in managing a school are in fact controllable, said Toohey, and that of course extends beyond salaries and benefits. For a typical Catholic school, he continued, with a few thousand students, the budget may be $30 million or more on an annual basis, and this implies that as much as $6 million can be examined for cost savings.

Xperience and Puridiom, a procure to pay solutions provider, have partnered to provide spend improvement services to private and faith-based schools through Xperience’s Thesis (aka the spend improvement service), a platform that combines spend analysis and supplier networking to participating schools.

For better spend management, said Toohey, there are a number of best practices that are especially useful in secondary education, and cover supply chains (and thus B2B payments), including prior approval for items, whereas traditionally the model has been an inefficient one, “where people buy items and then submit for reimbursement.”

Executives at schools should also make sure to purchase from approved suppliers, and use technology to track expenses and also collaborate with other schools. Toohey noted that consortiums of schools can work together to realize buying power from vendors of scale and size, such as Office Depot.

With the right technology in place, said Toohey, such as bank cards, and push alerts (such as offered by the partnership with Puridiom as mentioned above), expenses can be managed in real time, and cost savings can be realized initially of at least $35 per student annually, with room to grow. One area of potentially significant saving beyond even that tally, he said, remains travel expenses. Many schools have growing travel expenses, as more students come from abroad and there are also trips students (and faculty) take to, say, China or Latin America for educational purposes.