Oxygen Finance - Creating a revenue stream through early payment of invoices

  • By London Councils


Oxygen Finance is a world-leading early payment solution provider and the leading provider to the UK public sector.

Oxygen works with local authorities to put them in a position where they can pay a significant proportion of suppliers’ invoices on or around day 10 after invoice date. They do this through a combination of education, training, tactical deployment of facilitating technology (like electronic invoicing, which they can implement and operate without charge) and propagation of best practice. On the council’s behalf, Oxygen then engages with suppliers to agree an early payment rebate, relating to the amount of acceleration achieved on each invoice: this creates an income stream for the council from its existing spend and injects liquidity into the supply chain.

Oxygen’s early payment platform securely automates and manages the entire rebate process and facilitates automated financial reconciliation, all as a complement to the council’s ERP functionality, while providing spend insight, purchase-to-pay (P2P) transparency and rich performance analytics.

Key to Oxygen’s involvement is the scale that its programmes reach, with thousands of suppliers now choosing to participate and hundreds of millions of pounds’ worth of council spend being accelerated to suppliers.

Implementation is preceded by a robust assessment process to validate the business case and Oxygen then offers a value-based “gainshare” arrangement, whereby they are remunerated for the implementation and operation of the programme, as a proportion of rebates that are actually generated over time.
With clients the length and breadth of the country, we are working closely with several London Councils and have already implemented income generating programmes at London Borough of Croydon and London Borough of Bexley. Recently we have engaged with City of London, Harrow and Hammersmith and Fulham amongst other London Councils, who are all keen to implement a programme. Across our mature client programmes, councils are typically each seeing upwards of £50,000 of early payment income in rebates each month, while suppliers are typically paid 20 days earlier than their contracted terms.



The London Boroughs of Bexley and Croydon are already live and realising the benefits of Oxygen early payment programmes, including:

•generation of substantial and tangible new rebate income: the rule of thumb is that a council can realise bottom line income equivalent to c.0.1% of its total procurement spend every year;
•efficiencies within the Council's P2P processes and policies;
•mitigating the risk associated with late payment legislation; and
•stronger relationships with the supplier base and increased creation of Social Value.


Oldham Case Study

We started working with our first client Oldham Council in 2012 to deliver an Early Payment Scheme and they have recently extended their contract for another 4-years under a Framework Agreement. Their scheme has gone from strength to strength over the past few years and is currently generating rebate earnings in excess of £500k per annum, and £50m of contracted spend is onboarded into the programme to date. 

One of the key factors to the scheme’s success has been the clear and compelling articulation to Oldham Council’s supply chain of the value of participating in the programme using a suite of tried and tested marketing tools. Explaining to Oldham’s suppliers the work that the Council is doing to improve payment processes and work in partnership with their supply base not only fosters programme uptake, but also encourages suppliers to help drive best practice (e.g. e-invoicing) and compliance (e.g. no PO/ no pay) themselves. This makes the programme a real win-win for the Council and its suppliers. 

Oldham Council and Oxygen are finalists for a CIPFA Public Finance Award for the Innovative Procurement Initiative category for the Early Payment Scheme. Read Oldham Council’s Case Study for more information and visit our website www.oxygen-finance.com for other Case Studies.