New changes in the law could help small to medium size businesses unlock cash that is delayed in their invoices.
Ministers have revealed their plans to stop contract terms that prevent SMEs working for bigger businesses raise finance for invoices that are delayed by them.
The clauses are routinely introduced to avoid sub-contracting and guard confidentiality, but this means that the smaller businesses are missing out on other opportunities.
The proposal is set to be legally effective by the end of 2018, as alternative finance option invoice finance continues to grow and becomes more popular.
But what is invoice finance?
Invoice finance is a form of short-term borrowing where a finance provider will buy your invoice for a fee helping your business continue growing. According to the figures taken at the UK Finance show, invoice finance spiked by 5% last year whilst bank funding fell. Roughly the stock of invoice finance is currently at £9.5 billion.
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