The Government has put forward new laws which will allow small businesses to access invoice finance.
This is all a part of small business minister, Kelly Tolhurst’s, industrial strategy initiative to allow companies to raise money from unpaid invoices. This will allow a lender to fund a business in exchange for the right to receive payments from the companies customers who have been invoiced.
‘’These new laws will give small businesses more access to the finance they need to succeed and will ensure they have a level playing field from which to set fair contracts with the businesses they supply’’.
Currently, restrictive contracts which larger businesses impose, mean smaller suppliers are unable to receive invoice finance. This is set to change with the new laws removing the restrictions, which are believed to come into play at the end of the year.
The estimated value of the stock of invoice finance to SMEs is claimed by the government to be approximately £9.5bn.
National chairman of the Federation of Small Businesses, Mike Cherry, stated how the move was ‘’welcome’’. He said how small businesses, more so exporters, welcome this extra potential choice.
He believes the issue which is being indirectly addressed here must be faced. ‘’The UK’s £1bn late-payment crisis sends thousands of firms to the wall every year. It needs to end’’. ‘