Many of the UK’s leading private schools and academies turn over vast amounts of money each school year. As fees, funding, and donations flow into the coffers, there can often be a surplus once operations have been funded and obligations met. It can be sensible to save or invest this money, but how do you ensure your school’s spare cash is managed responsibly?
The short answer: With a treasury policy.
A treasury policy outlines how your organisation should manage its financial resources, including cash, borrowing, investments, banking relationships, and risk.
Schools and educational institutions often manage complex financial responsibilities — including irregular funding cycles, public scrutiny, and oversight from multiple bodies. This is especially true for independent schools and academies, which typically have full financial autonomy, charitable status, and are subject to regulatory oversight from bodies such as the Charity Commission and the Independent Schools Inspectorate (ISI).
Ultimately, a good treasury policy helps ensure sound financial management and clear audit trails, while keeping key stakeholders (governors, trustees, and finance teams) on the same page when it comes to moving and spending money.
Here, we break down what a school’s treasury policy could look like and discuss the benefits of a robust and compliant policy framework.
Below, we explain what you need to include in a school’s treasury policy and why you need each section. However, if you want to skip the admin, we’ve done your homework for you. Click the link to download your copy.
Your treasury policy document should begin with a section that defines why the policy exists (its purpose) and what it covers (its scope).
This section of your document should clearly outline who is responsible for implementing and monitoring the policy to ensure accountability, control, and compliance.
The governing board will generally have the overall responsibility for approving the policy and maintaining financial oversight. However, they may choose to delegate this responsibility on a day-to-day basis to the financial director to ensure the policy is being followed while managing cash flow, banking, investments, and reporting.
The next section should clearly communicate the key goals of your treasury policy. These might include some or all of the following:
This is a vital part of the document, as these objectives will ultimately guide your school’s treasury decisions and practices.
In managing its financial assets, the school (or trust) is exposed to the following key risks:
Credit Risk:
The risk that a financial institution or counterparty may fail to meet its obligations, resulting in the loss of capital or interest income. The school mitigates this by placing funds only with UK-based, dual-regulated, FSCS-protected institutions that meet approved credit criteria, and by spreading funds across multiple providers to reduce exposure to any single institution.
Liquidity Risk:
The risk that the School may be unable to access sufficient cash to meet its short-term financial commitments, or may only be able to do so at an unfavourable cost. This risk is managed by maintaining adequate cash balances, using short-term deposits, and regularly forecasting cash flow to ensure sufficient liquidity for operational needs.
Operational Risk:
The risk of financial loss due to internal errors, system failures, or breaches of control — for example, incorrect processing of transactions, reconciliation errors, or non-compliance with financial procedures.
The counterparty risk section of the policy document outlines how your school should manage the risk of financial loss if a bank or financial institution fails to meet its obligations. In other words, how do you protect your school’s money against loss if a bank collapses?
This might be a pledge to:
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This part of your policy document should set maximum exposure levels to any single bank or financial institution to help reduce risk. The aim here is to avoid over-reliance on any one provider, protecting school funds from potential financial losses.
For example, you may want to specify limits on the amount that can be deposited with an approved counterparty, or base those limits on factors such as credit rating, account type, or term length (as shown in the table above).
You may also want to include a requirement to spread funds across multiple institutions, each with their own unique banking licence, to take advantage of the FSCS protection.
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Including a reference chart comparing credit ratings from major agencies (for example, Standard & Poor’s (S&P), Moody’s, and Fitch) can help your treasury staff assess the financial strength of counterparties. These are known as “financial implied credit scores”, and they differ from traditional credit scores as they use current and historical financial data to project future credit risk — unlike scores from a credit reference agency, which look at past behaviour to determine future risk.
This chart also gives staff an at-a-glance table to:
This section of the document outlines how your school goes about ensuring it has enough available cash to meet its financial obligations.
In short, the responsible person (e.g., CFO, finance director, school bursar, or school business manager) should monitor and forecast short- and long-term cash flow, maintain a minimum cash balance for operational needs, and align investments with the expected timing of payments.
The goal is to ensure the school can always meet its day-to-day and unexpected expenses without disruption or incurring overdrafts.
This section defines the types of financial instruments the school is allowed to invest in. You may want to include:
The aim is to protect capital, ensure accessibility, and earn a return within an acceptable level of risk.
Following on from the previous section, this part of the policy outlines how and by whom investment decisions are made.
It should clearly state who is responsible for making decisions (e.g., finance director, finance committee, or senior management) and the criteria required to ensure investments meet safety, liquidity, and return objectives.
Essentially, approved procedures must be followed to ensure all investment decisions are prudent, transparent, and accountable.
This is an optional section that you may want to include, depending on your school’s commitment to ethical and responsible financial practices.
Note: This part hasn’t been included in our treasury policy template.
If you want to align your treasury decisions with your organisation’s values and mission, having ESG investment criteria can help ensure that your school’s surplus funds don’t support activities that conflict with its educational or social purpose.
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For more insights into the ethics of different UK banks, read the Ethical Consumer's Bank Guide.
The penultimate part of your school’s treasury policy outlines how you will track and review treasury activities to ensure compliance, performance, and transparency.
You may want the report to include:
This report might be produced monthly, quarterly, or when requested.
Finally, the document should conclude with a commitment to review the policy to ensure it’s still fit for purpose. This is typically done annually, but you can also decide to review things when there are significant changes (e.g. in regulations or to financial strategy).
There are several benefits to implementing a treasury policy in a school or academy, including:
Now you know what you need to include in your school’s treasury policy (and why it matters), you can create one from scratch — or grab a ready-made template from Insignis*.
Feel free to adapt and modify the language and template according to your school or academy trust’s structure, values, brand, and regulatory environment. Please ensure that it is reviewed by a financial or legal professional before publishing. This template is provided for general guidance only. We accept no responsibility or liability for its use, whether in its original form or after modification.
*Note: We’ve included some example numbers in the counterparty limits table. You’ll need to decide on the maximum deposit per bank and the maximum maturity period for your school.
Ready to strengthen your credit union’s financial governance? Download our free treasury policy example to support your own policy review.
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