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Both the Asset Based Finance Association (ABFA) and Skipton Business Finance have welcomed the announcement by the Department for Business, Innovation and Skills (BIS) that it will outlaw contractual clauses used by big businesses to prevent their SME suppliers from securing funding through Invoice Finance.
The ABFA says that these clauses are an example of poor payment practice, and an unfair and unnecessary restriction on the ability of small businesses to access crucial funding to support their growth.
Jeff Longhurst, Chief Executive of the ABFA, comments: “We welcome the Government’s commitment to addressing poor payment practices and getting a fairer deal for Britain’s small businesses.”
“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.”
Andrew Grantham, Sales & Marketing Director at Skipton Business Finance, said: “As unpaid invoices represent one of the biggest assets most SMEs have, bans on assignment have the effect of choking off a vital source of funding and for them to be outlawed is good news for small businesses in a difficult economic environment.”
He added: "We look forward to seeing the final detailed regulations to ensure that they are effective in allowing SMEs to access the finance they need through their unpaid invoices.”
Skipton Business Finance is fast-approaching a portfolio of 550 clients with a lending commitment of £65m.