According to the latest Government estimates, SMEs are owed £26 billion in late payments and spend an average of £10.8 billion every year trying to recover overdue payments.
It may come as no surprise then that increasing numbers of businesses are choosing to use invoice finance to ensure regular income and help cash flow. However, there are currently contract clauses in place that stop suppliers from sub-contracting work, affecting their ability to use invoice finance.
With this in mind, the latest statement from small business minister, Anna Soubry, which laid out plans to nullify these clauses, is good news. Soubry explained: “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 access to hard-fought funds. While invoice finance may not be right for everyone… I want small businesses to have the option of using it to increase cash flow.”
A small business commissioner will also be introduced to help SMEs recover their debts, in a role that Soubry says will help tackle the power “imbalance” between SMEs and larger UK businesses.
As well as being a first point of contact for small businesses, the commissioner will be able to provide advice and support on resolving disputes, offer access to mediation services and work to understand and report on complaints regarding unfair business practice.
Philip Brennan, head of Businesscomparison.com, said: “Invoice financing is one of the main funding options for SMEs, so making access easier will not only help them at ground level, but have a positive impact on the wider economy, too.”
The announcements come as a study from Amicus Finance reveals that European investors expect the alternative finance industry to grow by 23 per cent in the next two years.