Pharmacy finance FAQs
Pharmacy finance FAQs
We interviewed Seb Miles, Managing Director of Woodsford RxBridge, to discuss all things related to pharmacy finance. We explored the questions that we typically hear from pharmacists and explain how a Woodsford RxBridge facility can benefit pharmacies.
Watch the video or read the full interview below:
What is pharmacy finance?
Pharmacy finance, simply put, is finance specifically for pharmacy businesses. By understanding how the sector behaves and what the requirements are for pharmacies, Woodsford RxBridge have developed a specific technology- powered funding solution to meet those needs.
Why do pharmacies need specialist finance?
There are various generic finance products available for pharmacy businesses whether it be overdrafts, loans or asset finance. The facilities that we provide generate working capital to meet the requirements specific to the businesses and the sector.
Looking at the current circumstances around Coronavirus, peoples’ dependency on pharmacies has gone through the roof throughout the duration of the pandemic. Having access to a working capital facility allows pharmacies to buy all medication to meet their patients’ needs, and indeed to service their other operating overheads, whether that be staff going into isolation or just opening for longer hours.
How does a Woodsford RxBridge finance facility work?
A Woodsford RxBridge facility is very simple. Effectively, we are providing funding up to two times the amount of the monthly NHS revenue i.e. the money that is caught up in the NHS payment cycle.
We release that capital, making it available for pharmacy businesses to drawndown straight away. This enables them to buy additional medication, meet their operating expenses or opens up opportunities to utilise the capital in relation to acquisitions, investments or growth in the business.
Why should a pharmacy consider a Woodsford RxBridge facility over NHS finance?
Pharmacies use our facility quite simply because is it provides the largest quantum of funding available in the marketplace and it’s also the most flexible.
There are some schemes available through the NHS, but both the timing and the amount aren’t necessarily going to meet the requirements for a pharmacy business. What we have developed is specifically for the sector. Through our unique algorithm, we are able to understand the trading patterns and sensibly arrive at a quantum that will meet working capital needs.
In the context of the current pandemic, it is about being able to provide access to that funding both quickly and reliably. What we are seeing with the CBILS presently, and with the additional funding that is being made available to pharmacies, is that there is a time lag and it doesn’t necessarily meet the pharmacies requirement at the time.
Find out more about how Woodsford RxBridge can support pharmacies throughout COVID-19 here
How does a Woodsford RxBridge facility support the payment cycle for pharmacies?
The payment cycle for pharmacies starts when a GP issues a patient a prescription either by hand or electronically. The pharmacy will then dispense that medication to the patient. At that point, it creates liability due from the NHS to the pharmacy.
Typically, it will take the NHS two months to fund that prescription and effectively the pharmacy is having to bridge the working capital requirement in the meantime.
Woodsford RxBridge analyse pharmacy trading patterns. By doing this, we are able to assess effectively what is due from the NHS to the pharmacy business at any point in time and we are able to advance that cash to the business. Pharmacies can use this cash in the business to order medication, put towards operating expenses or indeed to fund the growth that would have otherwise been stalled whilst waiting for the NHS payment to come in.
What are the benefits of a Woodsford RxBridge facility for a pharmacy?
One of the biggest benefits of the facility is the flexibility that it provides. The quantum available is the largest in the market and it provides pharmacies with the ability to access those funds to use in their businesses as and when they need to.
It is a pool of capital available for a business to deploy as they see fit. It won’t necessarily go towards a specific purchase; we don’t control how it is distributed.
It is absolutely up to the pharmacy owner to see how they can best deploy their capital to put it to good use in their businesses. Ultimately, to make the best return and also provide the best care to their customers is absolutely paramount in their business.
What benefit does a Woodsford RxBridge facility offer to an already growing pharmacy?
For any growing business, there will be heavy working capital requirements in order to fund growth, particularly in pharmacy where the payments from your largest customer, the NHS, are lagging a few months behind.
By having the flexibility and the agility to be able to deploy this capital, pharmacy owners can grow their business more quickly. The additional working capital facility enables pharmacies and pharmacy groups to take advantage of opportunities as they present themselves, and is a fantastic tool for business finance directors to have in their toolkit.
How much does a Woodsford RxBridge facility cost a pharmacy?
Typically, the starting cost is between 1% and 1.25% a month. However, this is reviewed on a case by case basis.
Pharmacies are only charged on what they draw from the facility, so it is at the pharmacy’s absolute discretion as to what they draw, and therefore what the facility will cost their business.
Does a Woodsford RxBridge facility work alongside existing banking arrangements?
The Woodsford RxBridge facility works seamlessly in conjunction with existing banking facilities. Acquiring a pharmacy is a high value purchase, so a long-term loan from a bank akin to a mortgage may be required to allow owner to pay it off over a long period of time. Woodsford RxBridge offer a working capital facility to sit alongside more conventional long-term lending facilities.
We’re not looking to compromise that relationship with your bank: this will complement the existing facilities the pharmacy business has. It’s about finding the appropriate finance for the corresponding needs in the business.
A Woodsford RxBridge facility is designed specifically to fund the opportunities for growth in the business, as opposed to a long-term amortising loan available from a bank.
What differentiates Woodsford RxBridge from the traditional banks?
Woodsford RxBridge have a very deep knowledge of how pharmacy businesses operate. Between our management team, we’ve been funding pharmacy businesses for over 35 years.
We provide pharmacies with real knowledge and understanding of what the key performance indicators are, how their business is performing relative to other businesses that we’re funding, as well as insight and support in relation to the future pharmacy market landscape.
What is the onboarding process for a Woodsford RxBridge facility?
When a business is looking to take up a Woodsford RxBridge facility, naturally we will need to see some business information. This will include the last six months of NHS statements; the last three months of bank statements; and the last two years’ annual accounts. This is similar to what would be expected for any finance facility that the business is looking to obtain. On receipt, we can advise indicative terms for the pharmacy business’s consideration. If these terms are agreeable, we commence the onboarding process accordingly.
Our onboarding process is quite short. On provision of the information, we can implement the facility in as little as a week. Once an account has been activated for a pharmacy business, the business will receive a login to a specific portal. It is straightforward to register and log in, to request the drawdown to your bank account to the agreed facility limits. That will then typically be paid on the same day as the request is made.