The gap between paying for stock and being reimbursed is a structural feature of running a pharmacy. Funding it properly beats absorbing it.
The timing problem
You buy stock. You dispense it. You are reimbursed later. In between, your money is sitting on the shelves and in the submitted scripts.
That gap is manageable in a steady month. It becomes uncomfortable when purchase prices move against you, when volumes spike, when a category price change works through the system, or when you are trying to grow. Growth in particular widens the gap before it closes it.
Most pharmacies absorb this into their own cash and treat the resulting tightness as normal. It does not have to be.
What we arrange
- Working capital facilities sized around your actual purchase-to-reimbursement cycle rather than a generic overdraft limit
- Stock funding to support buying opportunities or seasonal build
- Unsecured professions lending typically from around £30,000 to £500,000, with some growth facilities up to £2m, at rates from around 8%
- Tax, VAT and PAYE facilities to spread predictable but awkward payments
- Wholesaler-supported loans, where your wholesaler stands behind the facility. Only a small number of healthcare lending teams offer this, so it is worth asking about specifically.
Our guide to professions loans explains how the unsecured route works, and the practice loan calculator gives an indicative repayment figure. For the wider picture across healthcare, see working capital.
Sizing it properly
The common mistake is arranging a facility sized to today’s gap rather than to the gap at your busiest point. A facility that covers an average month and fails in December is not doing its job.
Work out the peak, not the average, and size for that. The cost of unused headroom on most facilities is far lower than the cost of running out.
Overdraft or facility?
An overdraft is flexible and familiar, and it is also repayable on demand and can be reviewed away at the point you most need it. A committed facility costs more in arrangement terms and cannot be withdrawn on a lender’s whim.
The reimbursement cycle is a structural, recurring cash flow gap. For that, a committed facility is usually the better answer, with the overdraft kept for genuine short-term variation.
Common questions
Is invoice finance an option for a pharmacy?
Generally no. Invoice finance funds businesses that invoice other businesses on credit terms, which is not how a community pharmacy is paid. It is highly relevant to pharmaceutical wholesalers; see wholesaler finance.
Can I fund stock for a buying opportunity?
Yes. Short-term facilities exist for exactly that, and the arithmetic is usually straightforward: if the discount exceeds the cost of the money, it pays.
Can I release cash from equipment I already own?
Often, yes. A dispensing robot or other owned equipment can be refinanced to release capital without property security. See pharmacy robotics and dispensing finance.
Will a working capital facility affect an acquisition application?
It is taken into account in serviceability. If you are planning a branch acquisition, tell us before arranging working capital so the two can be structured to sit together rather than competing.
I trade as a sole trader or small partnership. Does that change anything?
It can. Borrowing of £25,000 or less to a sole trader, or to a partnership of two or three partners, is regulated consumer credit, which is outside what we arrange. Above that figure, or where the pharmacy trades through a limited company, the finance is commercial and we can help.
All figures are indicative and subject to lender assessment, your circumstances, valuation and prevailing market conditions. Commercial mortgages and unregulated bridging loans are not regulated by the Financial Conduct Authority. Property offered as security may be at risk if you do not keep up repayments.