Funding issues not just the preserve of state schools

News Article

As the proposed new funding formula for state schools continues to prompt protests from head teachers and parents alike, it might be easy to imagine that independent schools are immune from money worries.

However, funding difficulties can equally affect the private sector and a cash crisis can affect the financial stability and even the long term viability of an independent school.

Luke Morgan, a partner with Palmers who specialises in dispute resolution and debt recovery, explained: “A private education is a significant financial undertaking for any parent, with independent school fees now costing, on average, £13,200 per year.

“Not surprisingly, some parents may subsequently find paying school fees a struggle, particularly if they have suffered a change in circumstances.

“The knock on effect of this, according to the latest statistics is a 35 per cent increase in the amount of unpaid fees, with the Independent Schools Council, which represents more than 1,200 schools, describing the problem as ‘the most challenging for decades’.

“Although late payments are part and parcel of any business dealings, independent schools, face a number of specific problems when chasing parents for unpaid fees.

“Even though schools may routinely send reminders or even threaten sanctions for non-payment – it may sometimes be necessary to reclaim the money that is owed.

“Whilst there will always be hardship cases which may require leniency, not keeping on top of late payments can have a knock on effect and lead to serious cash flow difficulties for the school itself. In a worst case scenario, this may lead to a school having to close its doors to all pupils due to administration or bankruptcy proceedings.

“Keeping control of your finance and minimising debt is key to continued liquidity of funds,” continued Luke. “It is important to get advice at an early stage and seeking advice from a legal professional who has experience of both commercial debt recovery and the education sector is particularly important.”

To find out how we can help you with all aspects of dispute resolution and debt recovery, please contact us.