Government removes ban on SMEs borrowing against unpaid invoices
25 August 2015
This move is the latest in a string of efforts by the government to tackle the late payments culture – which sees large firms stalling payment of bills, which can starve smaller companies of cash. It is estimated that the UK’s five million smaller firms are owed £26.8 billion in overdue payments.
The change will enable companies to use invoice financing to release funds from unpaid bills they’ve issued. Businesses apply to factors and confidential invoice discounting companies who will lend crucial cash using invoices for money owed to them as security.
However, many larger firms insist when drawing up contracts that smaller suppliers do not use invoice financing.
Small Business Minister, Anna Soubry, said that by getting rid of the restrictions on invoice finance, thousands of firms across the country could benefit from faster access to “hard-wrought funds”.
Cash flow can be a common problem for small businesses. Before you get involved in any scheme, don’t hesitate to contact us for our advice.