Dyke Yaxley’s Mark Bramall has welcomed moves to ban anti-invoice finance terms in business contracts due to come into force early next year.
Mark said the ban – which will be introduced by the Department of Business, Innovation and Skills – was an extremely positive move.
“The aim of the ban is to help small firms secure finance using money owed to them in invoices as security, and the Government believes it will boost economic growth and create more jobs.
“It will give small businesses the option to use invoice finance to help with cash flow and give them more control over their finances, which can only be good news,” said Mark.
“The problem for small and micro businesses has been that contract clauses designed to prevent them sub-contracting work have been a real stumbling block.
“They have effectively blocked the supplier from being able to access invoice finance arrangements, but the ban is really welcome news and it should really open up the financial options for businesses.
“Customers can be reassured though that the new measures will still mean they have a right to prevent traditional sub-contracting arrangements.”
Mark said there were two types of invoice financing traditionally used in the UK:
- Debt factoring – where an invoice financier manages a company’s sales records and collects the money owed
- Invoice discounting – the invoice financier lends a company money against unpaid invoices
“It’s important to bear in mind that invoice finance is not right for everyone, but it’s an option that may well transform the financial situation for many small businesses and help to increase cash flow which is a real step in the right direction.
“We believe many of our clients will benefit from the new rules to be introduced next year, and we’ll be working hard to ensure anyone who is eligible takes full advantage.”
Dyke Yaxley’s Mark Bramall