NHS Wales created a Shared Services organisation which embarked on a major AP transformation, resulting in the creation of two service centres servicing four NHS trusts and seven health boards. This ambitious undertaking established an Accounts Payable function that handles 1,800,000 transactions totalling approx. £4.6 billion spend per-annum.
This is the story of how NHS Wales overcame the many obstacles on the road to accounts payable transformation. Resulting in an award-winning AP service, continually improving efficiency, reducing costs to delivering greater value to all its stakeholders.
NHS Wales Shared Services Partnership (NWSSP) has 120 Accounts Payable (AP) team members who process transactions on behalf of eleven business units, each of which retains their procurement independence. NWSSP embarked on its transformation programme in the full knowledge it had significant issues with incorrect invoices. The partnership had identified that a high number of errors were being forced through the process due to:
- A poor OCR (optical character recognition) error rate of 45% (compared with an average of 74.5% and best-performing systems of 98%)
- Known issues with the Master Supplier File (MSF). 50% of suppliers were able to circumnavigate controls to enable their products to be purchased, without a purchase order
- Multiple payment sites making it easier for duplicate payments to be made
- Retrospective purchase orders often raised to the wrong supplier
- 60% goods received queries and 30% pricing discrepancies to investigate
- High level of internal cross payments with no supporting documentation
Consequently, the Procure-to-Pay (P2P) process was not working as well as it could. There were too many people involved, many did not understand the process within their organisation and processes were not consistent. An employee hinted at the scale of the problem: “There used to be queues of people at the photocopier, scanning invoices. Many got delayed or lost. There were secret spreadsheets being used.” There was much needed to change to reap the full benefits of a shared service.
To support a shared finance service for eleven autonomous healthcare organisations as part of NHS Wales’s bold digital transformation programme. The organisation uses Oracle E-Business Suite R12 but are planning to move to a cloud versions of its ERP, CRM and SCM applications.
To kick off the transformation, the NWSSP team identified where issues occurred across their systems and processes. They recognised the need for a product to provide payment assurance whilst they undertook operational and organisational changes, they selected FISCAL Technologies to provide the technology and intelligence to achieve this objective.
Secure in the knowledge they had reduced the risk of loss during transition, they were able to focus on building the shared service team’s processes, technology, and controls.
They quickly brought about new process improvements and efficiencies, that saved both time and money. This enabled them to hit target within the Public Sector Pay Performance and Practices Guidelines.
- Increased efficiency
- Since commissioning the software in 2016, some £25 million of duplicate payments have been prevented
- Improved productivity – payment assessment process reduced to under an hour daily
- Enhanced reputation with health board auditors, regulators, politicians, and other stakeholders
Enhanced assurance and additional benefits
Adopting FISCAL’s solution has highlighted duplicate and unused records for action in the MSF, which if left unchanged were a fraud risk. It has also ensured that all eleven business units score well in payment performance tests. Satisfied with the strong controls and visibility in place, NWSSP’s internal audit department is confident that there is now good governance, now receives Substantial Assurance in relation to duplicate payments.
Regional AP Manager at NHS Wales remarks: “We’ve not only reduced costs but have changed the way the shared service finance function is perceived across the business. Using AP Forensics, we’ve been able to elevate the AP function to the boardroom.”
Increased efficiency and best practice AP
Approximately half of transactions lack purchase order numbers for legitimate reasons – many intra- NHS purchases do not require them and there are several exempt categories – all are now processed seamlessly through AP Forensics. Previously the AP team was sinking under the weight of queries, they now have capacity to perform investigative work, challenge existing processes and explore new ways of doing things. The Regional AP Manager explains, “It’s become more of a thinking job, less a doing job.”
The AP team’s key performance indicators (KPIs) demonstrate how they are working more productively. By recording the error reason code in FISCAL’s solution, they have been able to identify trends, analyse root causes and change processes.
The payment run is no longer held up because of an anomaly. Each team member uses AP Forensics for less than an hour a day, to review prioritised risks, and the reasons why, which rapidly increases query resolution. This is all that is needed to provide the assurance necessary to safeguard the organisation’s supplier spend.
NWSSP achieved ISO 9001 accreditation 18 months ago, testament to the quality and consistency of its processes. At least 20 newly energised team members are studying for Accounts Payable Academy qualifications.
The AP team’s achievements were recognised when they won Procurement Team of the Year in the 2018/19 GO Awards for the transformation programme.
In conclusion, FISCAL’s Forensic solution has played a major role in the management and transformation of the NHS Wales Shared Services Partnership. Whilst preventing over £25m erroneous payments, it has also greatly improved efficiency across 11 business units with independent procurement teams. This has enabled AP to become an award- winning department, improving team morale, and enhancing its reputation with all stakeholders.