- Our Work
- Workforce & Leadership
- Engagement & Development
- Efficiency & Value
- Adapting to System Change
With the move to NHS SBS, AP invoice management may be very different for an organisation. The following post is based on engagement with multiple clients over multiple years on effective management of invoices using the NHS SBS system. More recently through engaging with organisations that regularly demonstrate maturity in this space, as measured through our Great Client metrics, factoring in a high % PO as our criteria. We’d like to specifically thank both Leeds Community Healthcare and Derbyshire Healthcare for their help in putting this paper together.
This post is focussed on Non Purchase Order invoice management specifically, and will use the term Non PO to denote this. We’ll look at 2 key roles within the Oracle system designed to ensure such invoices flow correctly for approval. Firstly is the Invoice Query Manager (IQM), part of whose role is to ensure that Non PO invoices are allocated to the correct approver within the Oracle system when received and has a number of tools to help with that. The second role is the Non PO Time Out Manager (Non PO TOM), whose role is to identify invoices that haven’t been correctly actioned by approvers and allocate them back to an appropriate person. In some organisations these are both done by the same person, or may be separate or multiple people.
Whilst there is correctly a large focus on increasing spend visibility and control through increased use of Purchase Orders and other means, there is still a large volume of Non PO invoices being received by NHS Organisations. As such, effective management of these to ensure good supplier relationships for future discount conversations and avoidance of late payment charges is still a significant workload.
Taking perhaps the end of the process first, the top organisations approach to Subledger close and the Non PO accrual tends to be different. Derbyshire Healthcare have a Day 1 close, so they can’t afford to spend a large amount of time on that day reviewing and recoding items in suspense from the accrual. Instead for the week run up to Subledger close the finance team as a group will review the outstanding uncoded transactions and ensure they are coded to the correct budget (either themselves or budget holders). On Working Day 1 any new transactions that weren’t already coded are then reviewed to the local accrual list and dealt with accordingly.
This approach in Derbyshire means that the members of the finance team all have a responsibility to help clear the Non PO workflow, and have the skills to access and review it. Thus a reliance upon a key member of staff as a single point of failure has been reduced as well, with the core responsibility remaining with the IQM to ensure all transactions have been picked up. However this can slightly skew the suggested Non PO rules report.
For Leeds Community, whilst the people doing the IQM role may change through promotion and other opportunities regularly, consistency is achieved through the use of a simple spreadsheet. This details by supplier, the people that may approve invoices, expected coding for those invoices, who their linked Finance Manager is and other comments, such as known leave. This allows the IQM to quickly allocate invoices out to the correct individual.
Such a report could easily be created from a modified version of the A31. Supplier History report, and Derbyshire Healthcare utilised a similar report to speed up investigation of who to send an invoice to. Key to both was keeping this document live, updating it daily, and also working with the Financial Management teams to ensure it was accurate and up to date. Indeed, the TOM was copied into leaver, starter and movement communications from HR as part of the process to ensure accuracy.
Both organisations ensured that the TOM and IQM workflows were cleared every day. If required, additional members of the team would be brought in to help with the workload.
At Leeds, the Time Out Queue was used to indicate issues. If something came into the queue then a proactive communication with the budget manager would take place to ensure that everything was OK.
In Derbyshire, the whole Finance team was happy to take queries to help ensure invoices were approved, be it simple queries on what code to use, or support on how to approve. This helps promote the team as a support service to the organisation, and encourages interactions with other departments. Financial Management and Financial Accounts were working closely together and collaborating, and indeed also with Procurement. In one organisation, the PO Time out Manager, who was a member of the Procurement team, attended the finance meetings each month to help ensure the smooth running of the P2P function as a whole. In Leeds, all disputes were shared with the Financial Management team to ensure in their departmental engagement these and actions required were understood.
Finally, regularly scheduled reviews take place on ensuring the invoice approval hierarchy was accurate and in line with Standing Financial Instructions, and reviewing the Non PO rules to minimise the amount of invoices having to manually be directed in the first instance.
In both organisations, the importance of timely approvals of invoices was recognised by the Finance and the Non Finance staff, who were generally quick to approve. This highlights a key cultural element to the approval, helped by the collaborative and supportive approach, and the importance both organisations placed on these key roles.
Thanks to this proactive approach to the invoice management, neither organisation received a lot of supplier calls or account on stop notifications. Strategic utilisation of cash could be made as invoices were available to pay, and this in turn resulted in a reduction of faster payments compared to peers, and the risks associated with them. We firmly believe that the lessons here could be scaled and applied to any organisation size and type.
If you’d like to discuss how we can help your organisation improve in this space, perhaps you’ve had a high turnover in this area and need support to get your workflow under control, please contact us at SBS-W.ClientPerformance@nhs.net.