NHS shared services aims to end paper invoicing

NHS Shared Business Services (NHS SBS) hopes to eradicate paper invoicing by implementing an e-invoicing system that will be free for suppliers to use.

NHS SBS provides business services in the areas of finance and accounting, HR, procurement, and primary care, and can process up to 30,000 paper invoices from its pool of 175,000 suppliers every day.

But the organisation, which came out of a joint venture in 2005 between the Department of Health and Steria, only processes 7% of its seven million invoices per year electronically - a figure it wants to increase.

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

The organisation is using Tradeshift following a successful pilot that ended in April. Using the new electronic platform, NHS SBS will encourage suppliers to submit and track invoices electronically, making payments more efficient, reducing the burden on NHS resources and helping suppliers receive payments more quickly.

Before using Tradeshift, suppliers were unlikely to use e-invoicing due to the costs and processes involved.

Murphy said suppliers were struggling to find the business case for using e-invoicing, but Tradeshift is free for suppliers to use. He estimated that a single invoice may cost the supplier between 10p-20p on other platforms. 

"Go and multiply that by seven million,” he said. And a lot of the NHS suppliers, especially the key medical and surgical suppliers, were invoicing in very big volumes.

E-invoicing also helps NHS SBS avoid paper and the postal system, and so speed up processes.

“Conceptually no one can argue with e-invoicing,” said Murphy. “It avoids post, lost in post, the time to go through that process. And on our end, you have to open it, scan it in, and verify it.”

Murphy said that 5% of all invoices the organisation receives on paper have to be sent back to the supplier with errors. But the Tradeshift platform has all of the NHS SBS validations at the entry point of submitting a new invoice.

“We would be validating an invoice 10-15 days after it was posted,” he said. “But now a supplier can’t process the invoice without passing these validations.”

Across the NHS, around 50% of organisations use one or more of NHS SBS’s services, and since April last year, it has provided financial services to 100% of all NHS commissioning bodies and a full range of services for around 30% of NHS provider organisations.

While the platform is free for suppliers to use, NHS SBS has invested up front to get hold of the technology. Murphy expects to see a return on the investment in the form of 90%-100% of their suppliers using the platform within the next two or three years.

He said most of the organisation’s 175,000 suppliers are small firms and the technology makes it easy for them to log-in, register and test an invoice; they are then eligible to use the system for all future invoicing.

Murphy foresees the majority of suppliers being willing to use the new system, but he expects the larger firms may take a little longer to integrate with NHS SBS.

“Some of the bigger suppliers who send thousands of invoices will have to do an integration with us, but it’s fairly simple, and the vast majority will just log on and register,” he said.

He also said there will always be some suppliers for internal reasons who won’t want to use the system, but he imagines this to be a small minority.

“Nobody we’ve spoken to has not seen the sense in it,” he said.

“The core purpose of what we do is to work on behalf of the NHS and invest in things they might not be able to do themselves. We have the ablity to invest in those things that push the NHS into the digital efficiencies that are available.”