Out with the old
Could the ‘late-payment culture’ finally be overcome? Deborah Bell looks at how the ban on invoice assignments could help fuel UK SME growth
UK SMEs eagerly await the proposed government legislation promised to land in the first half of this year, which will bring an end to big business customers being able to contractually impose bans on the use of invoice finance. For many businesses, growth has been held back by late payment and the strains this brings to cash flow. The imminent Bill Nullification of Ban on Invoice Assignment Clauses is long overdue, and simply cannot arrive soon enough.
The Bill will be a hugely positive move for the growth of Britain’s SMEs, mirroring similar rules already in effect in the US, Canada and Australia and would become part of the government’s wider Small Business, Enterprise & Employment Act, which will introduce a number of measures this year to tackle our
infamous late payment culture.
How have we got here?
Once passed, many SMEs attempting to drive growth can look to establish uninhibited trading relations with larger firms, protecting themselves from the unsympathetic treatment of payment terms, or contractual agreements prohibiting a solution being sought. Past government initiatives such as the Prompt Payment Code have, in practice, had little effect on the payments landscape, making this latest change all the more necessary and important.
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