U.K. policymakers have been moving forward with plans to strengthen the economic position of small businesses, from implementing the bank referral scheme to increase SMEs’ access to alternative finance to cracking down on late payments by large corporate buyers to their small suppliers.
Reports Monday (Aug. 10) said that lawmakers are set to introduce yet another legislative effort to help small businesses. Officials are reportedly going to launch new rules that nullify any contractual agreements between small suppliers and their corporate buyers that prevent small businesses from using invoice financing.
At present, some companies have banned their suppliers from using outstanding invoices as security when applying for finance. This type of lending has been on the rise in recent years as a way for companies to secure working capital while they wait to get paid and have their invoices settled.
But in a government notice dated Aug. 9, Small Business Minister Anna Soubry announced new plans to free SMEs from these clauses and implement a ban on future anti-invoice financing language. The plan, she said, “will speed up economic growth and create more jobs” by strengthening SMEs’ cash flow.
“Small businesses are the economic backbone of Britain, and we will do everything possible to make sure they continue to grow and create jobs,” the official said. “By scrapping restrictions on invoice finance, thousands of firms across the country benefit from faster access to hard-fought funds.”
She added that while the financing option is not necessarily right for every business — and emphasized that it is not an excuse for companies to pay their suppliers late — she wants SMEs to have the option of invoice financing. “This is all part of our plan to maintain the U.K.’s position as the best place in Europe to start and grow a business,” she said.
The plan to nullify all bans on invoice financing will apply to all businesses regardless of size.