B2B Payments

The NHS’s Faster Supplier Payments Progress

As the U.K. continues its struggle to tackle an ongoing late payments problem, major corporations are signing the voluntary Prompt Payment Code, a government-backed initiative whose signatories vow to pay their suppliers on time. The code, however, is largely without a method of enforcement, and depends on good faith for its signatories to follow through with their promises.

But the National Health Service, a PPC signatory, has launched an initiative that suggests the agency plans to follow through with its pledge. According to reports in The Information Daily, new legislation is in the pipeline that would see the NHS shift entirely to digital invoicing processes. The new rules mean that the NHS would pay its suppliers within 30 days of an approved e-invoice.

In an Information Daily article penned last week by Stephen Carter, the head of UK E-invoicing Center of Excellence at e-invoicing firm Basware, the NHS’s adoption of e-invoicing was described as a crucial step toward faster supplier payments.

Key to the incoming legislation, Carter said, is that it would require the NHS to adopt “true e-invoicing.” In other words, the agency would have to move beyond simply emailing a PDF version of an invoice. “For more NHS buyers,” he said, “processing a normal PDF takes longer and hits the same barriers to approval as paper.”

Plans for the NHS to migrate to e-invoicing are not new. The group has previously voiced a goal of becoming entirely paperless by 2018, and last May the agency’s Shared Business Services unit announced a partnership with e-invoicing platform Tradeshift. The collaboration focused on encouraging NHS suppliers to submit their invoices online through the portal.

The NHS’s Shared Business Services is the B2B unit of the NHS, offering back-end financial and procurement services to hospital trusts and other health care providers, according to Government Computing reports.

“Implementing e-invoicing is an incredibly important step for us in simplifying and modernizing supplier interactions on behalf of our clients, by allowing our organization and our suppliers to focus on value-adding activities,” said NHS SBS director of finance and accounting Simon Murphy to the publication.

Under traditional, paper-based methods, Murphy said that about 15 manual validation checks have to be performed on each supplier payment, including checking for accurate supplier name and payee information. Any inaccurate information delays supplier payments as a paper notice is sent to a supplier of any mistake – and that’s only after the manual review has been performed.

The partnership with Tradeshift means that the NHS’s system would pre-check this information, and allow suppliers to onboard to the platform at no cost to them.

Only weeks ago, the NHS’s Murphy wrote a separate piece for The Information Daily to expand upon the NHS’s goals in going paperless with suppliers, shifting the conversation toward the payments-based benefits of e-invoicing. Traditional, paper-based bills, he said, take about 20 minutes to process.

While the Tradeshift partnership is relatively new, Murphy said that the NHS has already seen significant improvement in operational efficiencies. About 30,000 paper documents have been eradicated on a daily basis and reduced calls to suppliers regarding invoice data accuracy.

“We expect between 90 and 100 percent of our clients and suppliers to be onboarded within three years,” Murphy said, “and, added to this, we expect e-invoicing to lay the foundation for a wider eCommerce strategy within the NHS.”

Numerous studies and analysis have shown that government implementation of digital procurement and e-invoicing practices has led to similar ventures in the public sector. And as the U.K. government hopes to eradicate late payments to small suppliers, the adoption of holistic e-invoicing by a government agency like the NHS could similarly push for other signatories of the Prompt Payment Code to adopt e-billing practices, allowing them to act on their promise of faster supplier payments.

For Murphy, the NHS’s recent e-invoicing push aims to be a model for others. “We want it to become a template for how to efficiently and effectively manage payments within public sector organizations,” he said, “and we are looking forward to further exploring other exciting aspects of eCommerce within the NHS.”

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New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

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