United Kingdom

case studies
united kingdom
efficiency optimization

Supply chain finance scheme unlocks credit for community pharmacies

HM Government is committed to helping tens of thousands of UK businesses secure increased levels of affordable finance

The challenge

HM Government wanted to enable UK businesses to secure increased levels of affordable finance to support job growth and help aspiring businesses expand. Specifically, it aimed to ease companies' liquidity, free up cash flow and improve their working capital.

Supply Chain Finance (SCF) is applicable when there is a significant rating difference between the buyer and supplier, as well as a significant time delay between invoice approval and payment. HM Government has a significantly stronger credit rating than most of its suppliers, making SCF a relevant solution, able to achieve these objectives.

As part of a broad initiative, HM Government worked with some of the UK's largest companies to support their supply chains using SCF. To show its commitment to this initiative, HM Government also decided to offer SCF to its own suppliers.

The solution

The first supply chain finance project undertaken by HM Government is a scheme for community pharmacies in England, which will unlock up to £800 million of new credit for around 4,500 businesses, many of which are small and medium-sized enterprises (SMEs). Citi was mandated to provide these services for the government.

UK pharmacists prescribe £10 billion of drugs to patients and invoice these to the Department of Health (DoH). The DoH in turn reimburses these 4,500 pharmacies in 36 days on average. By introducing SCF, pharmacists are paid in just 7 days.

The result

HM Government has taken the lead in its promotion of SCF as a way to support SMEs. The scheme, which is the first public sector SCF program in EMEA, improves the liquidity of companies in the scheme, frees up cash in the economy and comes at no charge to the government.