Magazine article Public Finance

Joined-Up Journey

Magazine article Public Finance

Joined-Up Journey

Article excerpt

'It ought to be a no-brainer,' the exasperated local authority chief executive said as we discussed the hurdles holding up the council's plan for shared financial administration services.

After all, the idea of public bodies sharing corporate and transactional services to provide economies of scale and improve performance is neither new nor radical. It was promoted by Sir Peter Gershon's efficiency review and more recently has been emphasised in the Cabinet Offices Transformational Government strategy and in the local government white paper. This autumn's Comprehensive Spending Review is expected to push it more strongly still.

As a result, all parts of the public sector are now expected to explore opportunities for greater collaboration and to look upon shared services as a way of increasing efficiency. However, so far, there has been a great deal of talk but very little real progress.

There are examples from within individual councils, such as Surrey's shared services centre, which brings together human resources, payroll, finance, revenues, procurement, property and IT activities. And there's the Coventry shared services contact centre, which involves a commercial partner working with all the local councils. Recently, Northumberland and Durham county councils announced that they would share technology, and Northumberland would host financial administration systems for Durham. But such arrangements are rare.

The reasons for this are complex, but most commentators agree that the biggest barriers are cultural and not technological. A soon-to-be-published CIPFA report starts with the premise that the introduction of shared services is an opportunity to improve and modernise service delivery, as well as reducing costs. It encourages councils that are thinking about collaborating to review their existing services and reassess both their existing and future requirements for financial administration systems. For these purposes, 'financial administration means the transactional procurement, payment, income and accounting processes that support a local authority.

Picture the scene in a typical council payments section a few years ago. You would have a team of people dealing with massive amounts of post. The invoices could arrive at any number of offices addressed to anybody who might commission goods and services. Often invoices could sit in in-trays for days, perhaps even weeks, waiting for authorisation and coding. They would then be forwarded to the payments team, who would sort them into suppliers, check that the payment slips had all been properly completed, batch them up for payment, prepare 'batch-listings' and forward the lists to data-processing to create the files that would make the payments and generate the cheques/remittance advice notes for posting.

Soon, however, most of the payments in leading local authorities will be generated electronically through the workflow and procurement systems. So, for example, when somebody receives the new laptop, stationery or service that they ordered - they simply tick the box on the system to confirm receipt; the coding and authorisation were dealt with when the goods were ordered. The system then automatically relates the payment to the purchase order, the payment is made electronically via the bank, the remittance advice is e-mailed and the payment automatically cancels the commitment/accrual in the accounting system.

These practices are not revolutionary and are being implemented in many local authorities. The London Borough of Bexley, for example, has adopted a strategy to encourage its suppliers to move to electronic invoicing and then link the approval and payment processes via its workflow system. Increasingly, it is directly interfacing its internal business systems that generate payments with its accounts payable system to minimise rekeying and manual input

Another London borough, Lambeth, now requires all invoices to be sent directly to a contractor's site in the Midlands, where the invoices are scanned and checked before processing through the council's workflow system. …

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