Defects in a new integrated financial management system installed by the HSE to process bills have left large and small suppliers with delayed payments for goods and services.
Several smaller firms in particular are bearing the worst of the brunt with the delayed payments badly affecting their cash flow, forcing them to resort to loans after failing to get money owed for two months or longer.
Many small- to medium-sized businesses have to shell out cash upfront for goods they supply to the HSE and require a quick turnaround in payment.
It comes as the HSE is heading for a deficit of €1.5bn and warned that next year’s funding of €22.5bn falls far short, hitting recruitment and new patient services.
The HSE has blamed the roll-out of a new Integrated Financial Management System (IFMS) – a one-stop-shop for payments to replace local offices – for the serious hold-ups.
The delays are understood to involve a wide range of services – from waste disposal to cleaning and medical supplies.
Around 39,000 of almost 100,000 invoices from suppliers due payment at the beginning of this month were without proper reference numbers due to the fault of the HSE and have to be manually checked, fuelling delays.
A HSE spokesman said the new IT system, designed to streamline payments, covers the HSE East as well as corporate and national services.
Other HSE areas are unaffected, and invoice processing and payments for these services are operating as normal.
“IFMS enables the centralising of the processing of supplier invoices and the application of stringent invoice analysis, validation and compliance checks.
“This will address long-standing procurement compliance issues, and allows improved financial reporting and forecasting.
“Internal controls have been designed into the new processes, which require that requisitions and purchase orders are properly authorised in advance by the budget holder or their authorised delegate.
“It also allows that receipt of goods and services is confirmed at the time of delivery of same, and that these two elements of the three-way match are processed in order to allow the invoice to be processed electronically on receipt by the HSE and paid without delay.”
However, the processing of invoices for some suppliers continues to be delayed due to a significant number of invoices which do not reference an official purchase order (PO) or goods received note (GRN).
“A proportion of these relate to transactions which began under a number of old systems and are now being processed by the new system.
“All invoices that are missing PO or GRN information require manual validation and compliance checks to allow them to be processed in the new system and this has led to the majority of the delays.”
Asked how many invoices are impacted, the spokesman said: “We are now working through around 96,000 invoices which were due for payment by October 1.
“Of these, around 39,000 did not reference an official PO number.
“As we work to process these, additional invoices continue to be received each day. Therefore, the figure for those awaiting payment does not remain static and can fluctuate from week to week.
“Notwithstanding these delays, supplier payments are being processed on IFMS on a daily basis, with €930m of supplier payments processed on IFMS in the 14 weeks since go-live.
“We are continuing to work through the temporary delay in processing some supplier invoices as we transition to a new finance and procurement process in parts of the HSE.”
Commenting on the pressure felt by HSE suppliers, Neil McDonnell, chief executive of the Irish Small and Medium Enterprises Association (Isme), said: “While we appreciate that glitches in procurement systems can occur from time to time, the SME sector is highly dependent on state purchasers such as the HSE to discharge their debts on time and in full.”
