London Borough of Islington

Delivering on a prompt payment promise

Industry:

Public Sector & Non-Profit

Regions:

Europe

Solutions:

E-Invoice Receiving

Delivering on a prompt payment promise by implementing a ‘no paper’ invoice policy

When Islington Council decided to innovate its payment processes to provide suppliers with more choice, it was surprised by the broad spectrum of businesses ready to jump on board. Now, the Council can accelerate invoice approval times without foregoing control and suppliers can benefit from early payments.

Islington Council is the London borough’s local authority and provides over 600 services to its 206,000 residents. Most council funding comes from the national government, with just 11% of its income accounted for by Council Tax. The council is committed to delivering efficient and value-for-money services in the face of significant funding cuts.

Key takeaways

95%

of suppliers paid within 30 days

75%

reduction in AP processes

£ 176k

in annual savings

Islington council's challanges

Islington Borough Council is firmly committed to prompt payment of its suppliers, particularly smaller businesses which are the backbone of the UK economy. It pays 95% of invoices within settlement terms and has a policy of paying local suppliers within 10 days.

As a prime funder of its supply chain, the forward-thinking council was looking to innovate its payment processes to increase supplier choice and strive for excellence in its Accounts Payable function.

The Council had a long-established relationship with Basware through its Scan & Capture and e-invoicing solutions. It decided to embark on a project to implement Basware Pay and approach its diverse supplier base.

How Basware pay enabled Islington Council to save both time and money

Basware Pay provides a seamless, easy-to-deploy payment solution. It combines Mastercard’s payment processing capability with Basware’s digital Purchase-to-Pay and e-invoice network, allowing payments to be issued quickly and seamlessly after invoice approval.

The solution would give the Council the ability to pay its suppliers early – in as little as two days – using secure, online payment technology for frictionless transactions. Suppliers accept a small discount from the invoice value in return for early payment.

The Council started by segmenting its supplier base into tiers based on expenditure. It chose to invite rather than mandate its suppliers to participate in Basware Pay, by reaching out personally to existing contacts amongst its tier-one suppliers, who account for the bulk of its spending, to set up meetings and initiate strategic conversations.

It’s vital to clearly articulate the proposition and benefits to the supply base…Basware helped us to achieve this with a tried and tested engagement approach including marketing materials and messaging

Bill Cavanagh, Payment Service Manager, Islington Borough Council

Results

At first, the Council thought it would be mainly smaller suppliers that would jump at the chance of getting paid early. But in practice, it has seen a broad cross-section of companies express interest and opt-in.

The thing that unites these businesses is that cash flow is absolutely vital to organisations of all sizes and industries in today’s economy, and suppliers welcome choice. The Council will be offering Basware Pay as an option to all new suppliers moving forward.

It’s vital to clearly articulate the proposition and benefits to the supply base…Basware helped us to achieve this with a tried and tested engagement approach including marketing materials and messaging.”Bill Cavanagh, Payment Service Manager, Islington Borough Council.

Islington Borough Council has been able to capture the rebates offered by Basware Pay, helping to bring its Accounts Payable function a step closer to becoming cost-neutral. Using technology to automate and manage the rebate process additionally delivers valuable insight into P2P performance, building further momentum for process improvement.

The Council has a culture of prompt payment, which is part of good corporate citizenship. It is keen to take the lead in innovation to help suppliers optimize their cash flow, as it will benefit the local economy and community. It also believes that ultimately, this mechanism for prompt payment will become the norm in the marketplace, particularly as regulatory impetus increases.