Paul Christensen is CEO of fintech Previse
From PPE production to staffing hospitals, the NHS has overcome a myriad of challenges in 2020. The healthcare industry now faces rising Covid cases and Brexit uncertainty while its suppliers experience mounting fiscal pressure. Distributing the Covid vaccine presents the greatest logistical challenge the UK has faced this century. Paul Christensen argues that the healthcare industry and government must take decisive action to secure the whole length of the vaccine supply chain.
If Britain successfully distributes the Covid vaccine, it will constitute the greatest feat the logistics, transport, and health industry will pull off this century. Plans are in place to secure the cold supply chain the Pfizer vaccine requires. St John Ambulance is training thousands of volunteers to administer the vaccine. The first vaccines are already being rolled out to the most vulnerable. However, discussion of the vaccine has neglected one of the most crucial elements of a swift distribution: ensuring accelerated payments for suppliers. Thousands of small firms are expected to play their part in distribution of the vaccine, while having to wait and chase months to get paid.
The face of international supply chains has changed dramatically since the beginning of the pandemic. The British logistics and transport industries have adapted to changing rules, local lockdowns, and shifts across all markets, all while staring down the barrel of either an eleventh-hour Brexit deal or no deal at all.
Regardless of what happens on the first of January, the logistics and transport industries will face new restrictions, which are likely to be overloaded with bureaucracy, all while dealing with the aftershocks of the second lockdown. We are already seeing overcrowding and processing delays at ports. Distributing and administering a vaccine at a national level was never going to be an easy task, but with so many factors to consider, the government and industry needs to do everything in its power to ensure a smooth, resilient supply chain. A key aspect of this is paying suppliers quickly.
Accelerated payment is essential for supplier agility
Traditional finance operations can take up to 120 days to pay invoices. This long-standing culture of long payment terms reduces supplier liquidity and limits opportunities for investment and growth. One of the simplest ways to protect vaccine distribution, avoid bottlenecks and enable supplier agility is to accelerate payment of invoices throughout the whole supply chain.
The problem of slow and late payments isn’t new, even before the pandemic late payments to suppliers amounted to over £23 billion, according to Pay.UK research. The Federation of Small Businesses found that 62% of small businesses have experienced either an increase in late payments and/or had payments frozen completely as a result of COVID-19. The government and NHS cannot afford for late payments or long payment terms to plague Britain’s vaccine supply chain if they want to ensure its successful and safe roll-out to those who need the vaccine most.
Technology enables instant payment
Both the government and the NHS, as well as industry, can adopt Day-1 payment policies for invoices in a way that would also be sustainable long-term for their own cash flow. The technology and processes exist to enable suppliers to access cash immediately without requiring the buyers to change or speed up their payment processes.
Machine learning makes it possible for both the private and public sectors to enable early payments, and benefit. Paying suppliers faster demonstrates a real commitment to sustainability and strengthens supply chains at minimal cost to the taxpayer. Every supplier deserves the opportunity to be paid on day-1.
Patients receiving the vaccine is the final result in a long chain where each step needs to perform flawlessly to ensure the vaccine is delivered. In order to do this, suppliers at each step need to have cash available when they need it to ensure they can perform their part. To create a sustainable vaccine supply chain, we need to take on the inertia that suppliers face when trying to get invoices paid. Increasing the strength of the supply chain as a whole will have a positive impact on every participant and enable a smooth and swift distribution.
From production and transport to the healthcare workers administering the vaccine, the whole supply chain requires fast payment. Now is the time for government, hospitals and industry to work together to provide financial security to the whole supply chain and secure the vaccine’s distribution throughout the UK.
Paul Christensen is CEO of fintech Previse, which uses machine learning to get suppliers’ invoices paid the moment they are received.