Aldermore has welcomed the government's decision to end the ban on assignment contracts….
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div>Aldermore has welcomed the government’s decision to end the ban on assignment contracts.
The decision outlined in the ‘Nullification of Bank on Invoice Assignment Clauses’ was welcomed by Carl D’Ammassa, Group Managing Director of Business Finance at Aldermore.
Carl stated the government’s decision to nullify the ban on assignment contracts would help smaller firms release the value of unpaid invoices.
“Bans on assignment contracts are sometimes put in place by large corporations to prevent smaller businesses from selling their invoices to third parties,” explained Carl.
“This can suffocate fast-growing smaller businesses, many of whom don’t want to turn down big contracts but can’t afford to have capital tied up when those large businesses don’t pay on time.”
Aldermore recently revealed 15% of key decision makers in SMEs were kept awake at night worrying about late payments.
“Ending the ban on assignment contracts will mean that all SMEs will at least have the option of using invoice finance to free up cashflow and prevent late payments becoming an issue,” added Carl.
“At a time when access to finance is high on the list of priorities of UK SMEs, having one more financing option available for all is an extremely welcome move.”
David Morris, Managing Director of Commercial Finance at Hampshire Trust Bank, was positive to see the government taking action to break down barriers of alternative funding forms of funding.
“A recent study by the Enterprise Research Centre revealed that finance is a barrier to growth for around a quarter of all businesses and a positive solution to this challenge is invoice finance,” said David.
“This type of financing can help businesses increase cashflow, giving companies access to funds when they need it.
“British businesses need access to a wide range of funding options to reach their growth goals.”
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