On the day the payroll run falls due, a trust finance director looks at a cash balance that will not cover everything. Staff must be paid. The invoice run is what gives. Harrogate and District NHS Foundation Trust has described exactly this, paying only a little over a fifth of its non-NHS suppliers on time because it had to withhold payments to meet payroll without emergency support. The decision is rational. It also signals that something in the system's plumbing has gone wrong.

The Better Payment Practice Code requires trusts to pay 95 per cent of suppliers within 30 days. Across the NHS, the share of trade invoices settled on time has fallen from over 90 per cent in 2023/24 to under 88 per cent in 2025/26. An analysis of 172 trust annual reports found at least seven trusts paying fewer than half of their trade invoices within the period, up from four a year earlier. Oxford University Hospitals and East Kent Hospitals University each paid under a third. Oxford pointed to a low cash balance requiring careful management, a phrase that carries more alarm than its bureaucratic wording suggests.

The causes are familiar. Trusts are running operational deficits and missing savings targets, while deficit support from NHS England has in some cases been delayed or withheld. Each is a budget problem, but late payment converts it into a cash problem, and cash problems are harder to defer. A trust can carry a deficit on paper for years. It cannot carry an unpaid payroll for a week. Suppliers therefore become the shock absorber, extending involuntary credit to a public service.

For a multinational, a slow-paying customer is an irritation. For a small medical device manufacturer, a software developer or a facilities contractor, a long wait on an NHS invoice can decide whether wages are met the following month. Late payment raises prices, because suppliers build the cost of waiting into their quotes. Some will quietly decline NHS work. That sits badly with a government that wants the health service to be a better customer for British life sciences and to adopt digital and AI tools at pace. Procurement reform, new frameworks and ambitions for a single patient record all depend on suppliers believing they will be paid. A health service that pays late teaches the market to price it as a credit risk.

There is an accountability problem as well. Payment performance is published in annual reports, so the deterioration is visible, yet it draws far less attention than waiting lists. Trusts are asked to deliver elective recovery and productivity gains while cash is rationed behind the scenes. Those two demands pull against each other. Holding back supplier payments to meet payroll amounts to borrowing from the private sector, with no agreed limit on its duration and no line in the national accounts to show it.

The practical response sits mainly with the centre. NHS England and the Department of Health and Social Care should read the payment code as an early warning indicator. System-level cash forecasting, with clear timing for when deficit support will arrive, would let trusts plan rather than improvise. Finance directors also need room to explain publicly when and why they are paying late, so that boards and regional teams see the problem before suppliers do. Suppliers will draw their own conclusions from the published figures and adjust contract terms accordingly, which pushes costs up for every trust, including those that pay on time.

The NHS cannot reform procurement, attract investment and rebuild public confidence while its suppliers act as its overdraft. Until deficit support arrives on a predictable schedule, late payment will keep rising, and the cost will keep moving to the businesses least able to absorb it.

‍