NHS Wales has launched an early payment programme for its suppliers, which it says will create an additional income stream for reinvestment into services and help achieve greater efficiencies.
NHS Wales said it was working with early payment provider Oxygen Finance to improve its purchase-to-pay processes as part of a wider efficiency drive.
The programme will offer suppliers early settlement of their invoices in exchange for a discount directly proportional to how quickly the payment is made.
Russell Ward, head of Accounts Payable and e-Enablement at NHS Wales Shared Service Partnership, said the move was a “win-win” scenario for the health boards and trusts across Wales.
“The programme will not only open up a welcome new income stream but crucially allows us to develop better relationships with suppliers and vastly improved efficiency across our procurement systems,” he said.
NHS Wales has an annual spend of over £4bn on goods and services and the early payment programme is estimated to deliver savings of around £9m over the contract period.
The health authority said as part of the programme, Oxygen Finance said it would be supporting the change by providing a transitional team to bring suppliers onboard and secure technology, integrated with the NHS’ existing Electronic Patient Record software, so that transactions can be processed without intervention.
Oxygen Finance currently work with other public sector organisations, including Barnsley Metropolitan Borough, Cumbria, Oldham and South Tyneside councils, with similar early payment programmes.
Ben Jackson, chief executive of Oxygen Finance, said typically more than 50% of suppliers had participated in the councils’ early payment programme.
He added that a significant proportion of their invoices were being settled around eight days after the invoice date—around 20 days earlier than standard contracted terms.
“Our approach to early payment has proved to be hugely successful for our local authority clients and it is an exciting prospect to take this into the healthcare arena,” he said.
“We work collaboratively, embedding ourselves in our client’s organisations, working closely with their finance and procurement teams as well as suppliers, to ensure maximum return.”