47 Supplier Incentive Programme PDF 378 KB
Additional documents:
Minutes:
The
Executive Member for Environment and Finance & Governance and the Director
of Finance submitted a report for the Executive’s consideration.
The
purpose of the report was to seek approval of the procurement and
implementation of a SIP for Middlesbrough Council.
As
part of a drive to improve commercialisation, an opportunity had been
identified which planned to allow the Council to continue to support the local
economy and suppliers but also create an income stream that was not currently
being achieved.
The
SIP offered the Council the ability to continue to support the local economy
and suppliers but also make a commercial return of approximately £150k per
annum over the next 5 years.
The
Council had been considering the implementation of the SIP programme for some
time and it was hoped that the solution would further enable electronic
receipt, matching and payment of supplier invoices thereby improving processes
and cash flow for all suppliers as well as providing the functionality for an
optional three way incentive programme to deliver even earlier payments (e.g.
even earlier than 20 days).
With
enhanced checks and controls in place as part of the SIP programme, it also
planned to reduce the risk of duplicate and fraudulent payments, which
presented a heightened risk in the current economic climate. The SIP planned to
enable thousands of invoices to be processed early, injecting millions of
pounds of liquidity into the economy, with the additional revenue generated
from the SIP Programme being channelled into frontline services for the benefit
of local residents.
The
SIP worked on the following principles:
·
e-invoicing;
·
supplier
payment terms were set at standard 30 days; and
·
no supplier was compelled to sign-up to, or
participate in, the programme.
A
description of the key objectives of the project were:
·
to
procure and implement a SIP to suppliers;
·
to
on board at least 40% of in-scope suppliers (3rd party Trade spend);
·
to
improve P2P processes to maximise invoice acceleration; and
·
to
improve cash flow for suppliers that could assist in recovery from COVID 19 and
generate additional funds that could be reinvested into frontline services (on
a free of charge basis for small local suppliers - “Freepay”)
OPTIONS
Implementing a SIP
internally had been considered, however, the cost associated would have been significantly
more than the cost of procuring it via the NEPO Framework.
Oxygen Finance were
working with over 30 other local authorities and had proven experience in
implementation and delivery that the Council could not duplicate without
significant additional resources.
Oxygen had over 10
years’ experience in running Early Payment Programmes and had developed a tried
and tested methodology. That included templates and a fully resourced team to
minimise the effort required by the Council.
The Oxygen solution was
VAT compliant and had been subject to legal guidance to ensure compliance to
various relating legislative requirements including the Construction Act.
ORDERED
1.
That the Council
reverting back to the Statutory payment term of 30
days be approved.
2. That the procurement and implementation of a ... view the full minutes text for item 47