This week, newly-appointed small business minister Anna Soubry revealed brand new governmental plans to liberate the country’s micro-businesses from restrictive policies. SMEs will now be “freed” from clauses in contracts that, until now, prohibited them from invoice financing against big business on their customer lists, causing an array of tricky cash flow problems across the board.
The new ban on anti-invoice finance has been introduced this week but we have to sit tight for a few months and wait until the beginning of 2016 until the measures actually come into force. The nulling of clauses that have been blocking anti-invoice finance will mean that small businesses are now able to apply for finance through invoicing for money owed to them.
However, it is promising great things for UK small businesses and provides another little chink of hope on the horizon for those struggling economically at the expense of the lax financial practices adopted by big businesses. If all goes to plan, the abolition of anti-invoice finance clauses will “speed up economic growth and create more jobs”.
According to research carried out by the Asset Based Finance Association, 44,000 businesses have raised more than £19bn through invoice funding to date and this new moves aims to help further lubricate SME cash flow.
Soubry said: “Small businesses are the economic backbone of Britain and we will do everything possible to make sure they continue to grow and create jobs. By scrapping restrictions on invoice finance, thousands of firms across the country could benefit from faster access to hard-fought funds.
“While invoice finance may not be right for everyone and is absolutely no excuse for late payment, I want small businesses to have the option of using it to increase their cash flow. This is all part of our plan to maintain the UK’s position as the best place in Europe to start and grow a business.”
Anil Stocker, co-founder of MarketInvoice, which has just announced its collaboration with KPMG to support the growing interest in alternative funding, commented on the move. He said: “Business owners will know the frustration of completing a piece of work and then waiting months to get paid; so it’s important that businesses have the option to use their invoice to access funds straight away.
“The government’s move to stop big companies preventing smaller businesses using invoices to access finances is a welcome one, there was no good reason for big businesses to hold this power over their suppliers.”