The UK Crown Commercial Service is an executive agency and trading fund of the UK government. Matthew Sparkes, deputy director, leads the financial services category group which is responsible for £3bn of spend on things ranging from credit and fuel cards to insurance and financing solutions.

“If we have the money we should pay quickly. We shouldn’t need SCF,” Sparkes said. The government aims to pay smaller suppliers within five working days.

Pharmacies are a historic exception in that they receive funds for patients’ subsidised prescriptions. With the payment arrangements due to change in mid-2018, CCS had “a burning platform” to put alternative mechanisms in place.

Key questions, Sparkes, said, included how can the UK government leverage its credit rating? And how can we be as digital as possible?

Small local pharmacies are particularly dependent on cash flow and SCF proved to be invaluable to them. Some pharmacies would go out of business without it, he said.

But as CCS set out to find a solution, it became immediately apparent that they had never bought SCF services before. Sparkes led a team that went out and spoke to the market – but not just to find out about SCF but to understand how to future-proof the arrangements on a three-to-four year horizon.

What made sense for CCS was to be able to use third-party funds in a reverse factoring model, to use cheap government funds using the UK’s credit rating, or to be able to blend it. Some SCF suppliers were not comfortable with this.

CCS also wanted the funding rate to be no more than 3-month Libor plus 50 basis points, with reverse auctions used to reduce that rate. CCS had to look after the taxpayer.

CCS also looked for something that could be expanded across the public sector, which could be digital by default, leveraged the UK credit rating and was compliant with public sector procurement laws. After a fair and transparent process, the contract was awarded to Taulia.

A remarkably simple, 90-second onboarding process made it possible to quickly bring 1,500 pharmacies into the programme.

“We had hand-in-glove partnering,” Sparkes said. “And no pharmacies shut, because they were able to get access to this funding.”

The next step – how to role out this programme to the rest of the public sector? It’s an ambitious plan “But it’s been a very rewarding project.”

Read about Crown Commercial Service’s award-winning deployment of SCF

Read more case studies and insight from the SCF Forum Europe 2018