On 10 August 2015, the Department for Business, Innovation & Skills published a press release announcing a ban on anti-invoice finance terms in contracts which will come into force early next year.
The ban is intended to help more small firms secure finance against money owed to them in invoices and to provide easier access to finance speeding up economic growth and creating jobs. Invoice finance allows businesses to apply for finance using invoices for money owed to them as security which can mean that they can secure finance more quickly than if they waited for customers to pay the invoice. The Asset Based Finance Association has reported that more than 44,000 businesses receive over £19 billion of funding this way at any one time.
Commenting on the decision to outlaw the ban, the Small Business Minister Anna Soubry said:“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 cashflow. 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.”