Prime Minister David Cameron has announced that the Government will offer supply chain financing in the first UK Government Supply Chain Finance scheme for community pharmacies in England. The government estimates this could unlock up to £800m of new credit for around 4,500 pharmacy businesses, many of which are SMEs.
Community pharmacies dispense around 80 million NHS prescription items every month. They then claim payment from the NHS for the products and services provided.

The amount they are owed is calculated by the NHS Business Services Authority (NHSBSA), but with such high volumes to process, this takes time. Typically, pharmacy contractors receive an estimated 80% of their payment within four weeks of sending their prescriptions to the NHSBSA with the balance being paid the following month. It can therefore take eight weeks before payment is made in full. In the meantime, many pharmacy businesses use commercial loans – which are often expensive – to maintain cash flow.

Using supply chain finance, a bank will make the NHSBSA's estimated payment available to the pharmacist at around day seven. This means they will have access to money sooner, instead of having to wait for the first payment at the end of the month. For accessing the money early, they will need to pay interest, but it will be at a much lower cost than any borrowing arrangement they could usually access.

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The UK goverment are to be congratulated, this is important: it is the first time that a government recognised that their suppliers do have cashflow problems and need paying on time. The real test of the UK’s government's enthusiasm for SCF is whether they extend this facility to their Purchase & Pay Solution, that covers many more suppliers and not just small pharmacists