Why do you need a trading account?
- To ensure governors/trustees makes informed decisions on the viability of non-curricular activities
- To make governors/trustees aware of how much profit an activity is generating, or the extent to which the school budget is subsidising a loss
The Trading Business Plan should be part of the budget setting process, regular monitoring of traded activities ensures that you are on track with your original estimate. Your financial regulations will state that “the school has budget business plans in place for all trading activities clearly showing the anticipated operating surplus or deficit. If a subsidy is required from the delegated funds, then this must be formally approved by the governing body and recorded in the minutes.”
What are trading accounts used for?
Trading accounts are most commonly used for:
- Breakfast club
- After-school club
It is vital to make sure all the relevant expenditure is included:
- Cleaning materials
- Consultancy costs
- Admin costs
- Pest control
The total can then be compared to the estimated income in order to set the correct pricing structure; the aim is to break even or make a small profit that can be held in contingency to cover the cost of future major equipment purchases such as replacing ovens.
Monthly reports should form part of the governors’ budget monitoring pack to ensure they are kept fully informed of the current position, especially where there are changes to the amount of take-up.