SME invoice financing restrictions lifted

Restrictions which had previously prevented small business to access finance through invoices will be lifted early next year, the department of Business, innovation and skills (BIS) have announced.

Invoice financing allows businesses to secure money faster than waiting for their customers to pay them. The government are outlawing bans on assignment which have been imposed by large companies to smaller suppliers. These clauses were originally designed to prevent a supplier from sub-contracting work.   

Small Business Minister Anna Soubry hopes these changes will ensure that small businesses are able to grow and create jobs, saying:

“By scrapping restrictions on invoice finance, thousands of firms across the country could benefit from faster access to hard-fought funds. While invoice finance may not be right for everyone and is absolutely no excuse for late payment, I want small businesses to have the option of using it to increase their cashflow.”

Jeff Longhurst, Chief Executive of the Asset Based Finance Association (ABFA), has welcomed the BIC announcement and how it will allow more businesses to unlock the funding tied up in their unpaid invoices, commenting:

 “With the Government’s focus on reducing waits for payment and now outlawing bans on assignment, it’s clear that there is a real move to level the playing field for SMEs.”

“As unpaid invoices represent one of the biggest assets most SMEs have, these clauses have the effect of choking off a vital source of funding. For them to be outlawed is good news for small businesses in a difficult economic environment.”