Oxygen Finance

Are Early Payment Programmes Worthwhile For Suppliers? Three Business Owners Share Their Experiences.

With more local authorities and public sector organisations introducing early payment schemes, businesses are having to make the decision as to whether to join. But what are the what are the reasons for doing so – and how have other business owners found the experience?

Oxygen spoke to several firms who have taken part in advance payment schemes to get their views and understand whether the benefits promised as part of the schemes really have made a difference in their businesses.

The first person we spoke to was Steve Lightowlers who runs credit control for Trevors Foodservice. Blackpool-based, this family run business has been trading for almost sixty years and are members of Holton Council’s supplier incentive programme. We began by asking Steve to tell us a little more about the business:

“We deliver a vast range of catering food supplies, frozen ambient chilled goods, mainly to the education sector, but also nursing homes, cafes, anything in between really. Over the years, Trevors has grown massively and now delivers to 1,300 clients in the Northwest Area.”

We asked Steve how he had found the programme so far; “Trevors Foodservice have a great business relationship with Halton Council, which is strengthened by the Supplier Incentive Programme. We never have any issues with submitting statements. We get paid within two or three days of invoice submission, which is great for cash flow and for us paying our own suppliers.”

“The scheme frees up business resources, and my time, so I can deal with other things within the business. The company can invest and gives job opportunities as well because we’re growing all the time,” Steve concluded.

Neil Thornton is Director of Resources for Rochdale Borough Council, who also run an early payment scheme. We asked him what the benefits were for suppliers; “Through joining the programme, you’ll benefit from three key areas. First, fast tracking and prioritised invoice processing, improving your cash flow, reducing processing issues that can obviously cause delays in payment. Secondly, proactive support from our accounts payable and procurement staff and a dedicated email and telephone contact arrangement for query resolution. And then thirdly, of course, greater visibility across the council. It’s important that your business and you as a supplier is high profile in terms of its relationships with the council.”

For Andrew Hubbard, Managing Director of Under My Roof, the reason for joining Bexley Council’s early payment scheme had been the dependability of revenue; “We’ve been providing Bexley council with fully furnished partially expensed, fully maintained properties for their homeless families for the last 20 years, and have been part of the supplier incentive programme for almost five years. And in that time, we’ve seen many benefits.”

“The supplier incentive programme allows me to forget about the cash flow, because it’s going to happen on guaranteed is going to happen. Never has it let us down. We get paid on average five to eight days after we submit an invoice.” As Andrew put it, “we can now concentrate on what we do best”.

Other businesses value the speed at which payments are made under early payment schemes. Ram Mahendran, Director and Owner of Bromson Hill Nursing Home and part of Warwickshire County Council’s Premier Supplier Service explains; “Since joining the Premier Supplier Service in November 2018 we’ve been able to rely on predictable and early payment of invoices. We’re now being paid within two days of our invoice being raised. Being part of the programme has enabled us to focus on growth, bring cash flow forward and therefore increase our investment in new facilities, as well as maintaining the existing infrastructure.”

Given these experiences, we asked Ben Jackson, CEO at Oxygen Finance if the current focus on prompt payment by central government would solve small business cashflow worries; “The focus should be on offering early payment to their suppliers not prompt payment. Prompt payment is just paying on time – it’s contractual, and it should be the norm from payments, not something we feel government should need to coerce large organisations into complying with. There needs to be a fundamental change in thinking around what’s considered acceptable payment practice.”

Ben continued, “Paying suppliers earlier means a secure supply chain and savings for buyers, while suppliers still benefit from better cash flow and working capital, giving them a greater opportunity to grow and develop their business.”

We’ll give the last word to Victoria Goddard, Assistant Director of Finance at Sutton Council to explain the core purpose driving their early payment programme and how it benefits their suppliers; “Our aim is that you spend less time and resources managing invoices and chasing payments, which will reduce your cost of collection and enable you to focus resources on your core business rather than administration. No chasing, no delays, just accelerated payment.”

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