Industrial Strategy: New laws to ‘level playing field’ for small firms accessing invoice finance
New laws could soon arm smaller firms against contracts that prevent them raising money from unpaid invoices.
A small supplier’s contract with a larger business may, under current law, prevent it from securing invoice finance from banks and other investors.
Big companies sometimes stop their suppliers from assigning ‘receivables’, which is the right to receive the proceeds of an invoice.
But changes being brought forward today (September 10) by Small Business Minister Kelly Tolhurst could mean that any such contractual restrictions entered into after December 31 2018 would, with certain exceptions, no longer stand.
The Government said in a post on its website that the update would help stop bigger companies “abusing their market position”.
Small suppliers often unable to negotiate changes to contracts because they do not have enough power within the marketplace.
The measures are forecast to give the UK economy a long-term boost worth nearly £1bn and form part of the Government’s Industrial Strategy.
Kelly Tolhurst MP said: “The UK’s 5.7 million small businesses are the backbone of our economy and central to our modern Industrial Strategy, with more than 1,000 starting up every day.
“These new laws will give small businesses more access to the finance they need to succeed and will help ensure they have a level playing field from which to set fair contracts with the businesses they supply.”