NHS slashes time taken to pay suppliers

NHS SBS almost halves payment times thanks to Tradeshift partnership

There are fears budget cuts could be affecting NHS procurement of new technologies

The time taken to pay NHS suppliers has been cut by half.

NHS Shared Business Services (NHS SBS) announced this week that timescales had been dramatically reduced as a direct result of moving to cloud-based business platform, Tradeshift, just over a year ago.

It’s important for NHS SBS to constantly strive to improve the quality of the NHS, not only to conserve our own resources and improve the relationship with our suppliers, but also to save public money

Suppliers who use the platform are now paid in an average of 24 days instead of 42 – a 43% improvement.

Late payments continue to put the solvency of businesses at risk across the globe, especially small businesses. According to ABFA, UK SMEs are now waiting on average 72 days to get paid. The NHS has 175,000 suppliers and processes 7.2 million invoices a year, accounting for £170 billion of spend. By slashing payment times, it is leading the way in improving cashflow conditions for thousands of businesses of all sizes within its supply chain.

In addition to this, by transitioning from paper to cloud-based electronic invoices, NHS SBS has also become significantly more efficient with less resource required to push an invoice through the payment process, reducing the burden on NHS resources and allowing public money to be redirected to more-valuable services.

Other successes achieved by the organisation since implementation of the Tradeshift platform include:

  • The number of invoices electronically processed per month has grown from 5,000 (May 2014) to 50,000 (October 2015)
  • The average number of days from invoice date to available for approval has reduced from 14 days to 3 days – a 79% improvement
  • Accounts payable are now able to access invoice details and workflow straight away, instead of waiting for three days processing after it has been scanned
  • Because of the e-invoicing process, there is a 15% reduction in the number of query calls from suppliers because of upfront validation rules

Roughly £26 billion is still owed to SMEs and 80% of those companies have to wait a month or more beyond the agreed terms

Sharon Davidson, owner of Aresko, a consultancy provider for NHS clients, said: “One of our main pain points is getting the money in – speed of payment of the invoices is absolutely vital to me and the solvency of my business.

“As a small company, I need to know that once I’ve raised the invoice that it’s going to be paid promptly. What NHS SBS has done with Tradeshift is to enable that.

“Previously I would have to raise the invoice, send it in, and sometimes chase it. Whereas now, I raise the invoice, it goes by the cloud system, and I have all the updates I need. Messages come in - signed off, paid and it’s perfect. I don’t have to make any phone calls myself, I get it all online. I’m delighted with it.”

Stephen Sutcliffe, director of finance and accounting at NHS SB, added: “It’s important for NHS SBS to constantly strive to improve the quality of the NHS, not only to conserve our own resources and improve the relationship with our suppliers, but also to save public money.

“Managing the supply chains of over 300 NHS bodies is a huge task, which is why it’s so important to have back-office processes streamlined and working as efficiently as they can. Through Tradeshift we’ve been able to improve collaboration with our suppliers, which, along with other LEAN processes we’ve adopted, has helped us conserve resources and is expected to help with our objective to save the NHS £1billion by 2020.” <.p>

And Christian Lanng, chief executive of Tradeshift, said: “As we know from the regular headlines, late payments continue to be a huge problem in the UK.

“Roughly £26 billion is still owed to SMEs and 80% of those companies have to wait a month or more beyond the agreed terms.

“NHS SBS’s success shows it doesn’t need to be like this – its suppliers are now getting paid in less than two weeks. The technology now exists for businesses and suppliers to collaborate effectively, so there are no excuses left for firms burdening companies with late payments.”

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