Increased focus on prompt payment

01 April 2020 Seamus Ward

The national organisations have asked NHS bodies to pay suppliers within seven days of receipt of goods and services. Where invoices are disputed, payment for elements that are not under dispute should be paid within seven days, with the disputed element resolved within a further seven days.payment l

The guidance on the temporary finance regime issued last month, said prompt payments were vital to ensuring cashflow for NHS and non-NHS providers does not become a barrier to the provision of services.

It is understood that guidance is being developed to help the NHS interpret a recent Cabinet Office procurement policy note (PPN) on supplier relief due to Covid-19. The PPN seeks to ensure service continuity during and after the coronavirus outbreak. This could include considering payments in advance to suppliers if necessary. The NHS guidance will explain the exceptional circumstances where accountable officers could authorise such payments.

NHS England and NHS Improvement have moved to ensure that there is sufficient cash in the system for NHS bodies to pay suppliers. This will involve two payments in April – the first of which was made on 1 April. The second is due on 15 April – at that point, providers will have two months’ cash, allowing them to pay suppliers promptly. Further payments are due on 15 May and 15 June.

The payments include two elements – for block contracts and top-ups. The latter has two parts:

  • a central top-up to supplement income other than that covered by the block contract payment
  • a retrospective element or ‘true up’ after month end to ensure all reasonable expenditure has been covered, accounting for additional Covid-19 costs and actual income.

NHS England and NHS Improvement have sought to reduce the burden on finance departments, for example by extending the annual reports and accounts deadlines for providers, and, more recently, increasing the thresholds for the agreement of balances process. However, the national bodies have also stressed the importance of good financial governance – ensuring finance department resilience over the whole of the pandemic period and asking finance staff to remain vigilant on potential fraud and tax avoidance schemes.