Changes are ahead for small businesses when it comes to accessing finance. This comes in the form of a legal prohibition on bans on assignment.
Presently a supplier’s contract with a larger firm may include a ban on assignment clause. This can prevent it from securing invoice finance. Many companies have sales contracts contain provisions stating that assignment is prohibited or subject to certain conditions.
Bans on assignment clauses are typically to prevent a supplier from subcontracting work out to an inferior provider or are to maintain confidential dealings between businesses. They also have a consequence to the smaller supplier as they are unable to take an invoice finance facility to release the cash that is tied up within those invoices.
Any such contractual restrictions entered into after 31 December 2018, would have no effect and could be disregarded by small businesses and finance providers. This will help stop larger businesses from abusing their market position and will allow smaller businesses to access much needed cash flow solutions such as invoice discounting or factoring.
Our experience at Regency tells us that this will have a huge impact on the UK SME. Typically, the invoices this change will effect are large ones as they are primarily invoices to larger businesses who do not have cashflow worries.
If you feel that your business can benefit from this change in assignment law, please do not hesitate to contact us on firstname.lastname@example.org or 0161 280 4220 we’d love to help your business grow.