Another government-led step forward for the nation's small businesses and alternative finance players.
Small Business Minister Anna Soubry has put an end to contracts that prevent SME suppliers from attaining invoice finance against the value of invoices owed to them by large companies. From the early stages of 2016, clauses which forbid the use of invoice finance will be negated. This comes in the wake of a now-concluded government consultation on nullifying anti-invoice finance clauses.
The news will be well-received by the likes of MarketInvoice and Platform Black, which have between them advanced c. £565m to UK SMEs to date. A significant proportion of these platforms’ lending thus far has been secured against money owed by blue chip debtors. The Small Business Minister’s move to liberate SME owners from the shackles of onerous corporate contracts should improve nationwide access-to-capital, and the alternative options are becoming increasingly popular providers to turn to.
Anna Soubry commented:
“Small businesses are the economic backbone of Britain and we will do everything possible to make sure they continue to grow and create jobs. 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. This is all part of our plan to maintain the UK’s position as the best place in Europe to start and grow a business.”
The government’s desire to cement the UK’s position as a thriving hub of entrepreneurialism has played beautifully into the hands of the alternative finance market. We can now add invoice finance freedoms to the growing list of state-led support structures, which already includes a plethora of tax reliefs, the referral scheme, and so on.
“Business owners will know the frustration of completing a piece of work and then waiting months to get paid; so it’s important that businesses have the option to use their invoices to access funds straight away.
“The government’s move to stop big companies preventing smaller businesses using invoices to access finance is a welcome one, there was no good reason for big businesses to hold this power over their suppliers.”