Banning assignment bans
Factoring and invoice discounting are forms of asset-based funding structures that enable businesses to ease cash flow and fund growth by selling book debts and other receivables due to them from customers at a discount for immediate cash. Industry figures show an increasing use of such funding — £275bn in 2013, up by 10 per cent on the previous year.
However, a recent government consultation on improving access to finance for small and medium-sized enterprises (SMEs) identified one area that can act as a restraint. Under their standard terms of business, some customers do not allow their suppliers to assign (that is, sell) the debts due from them — this effectively prevents suppliers in such a situation from using factoring or invoice discounting. The government is now proposing legislation to address this.
Provisions in the recently published Small Business, Enterprise and Employment Bill will enable the government to issue regulations to make ineffective any clause in a ‘relevant contract’ that bans or restricts the assignment (sale) of the right to be paid any amount under the contract. A ‘relevant contract’ is to be one for the sale or supply of goods or services (but not financial services) entered into in the course of business…
Click on the link below to read the rest of the Gateley briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from The Lawyer
Briefings from Gateley Plc
When negotiating to buy a business, a buyer will often ask the seller to sign an exclusivity (or lock-out) agreement.
How do I ensure I have an enforceable liquidated damages clause rather than a penalty clause?
Analysis from The Lawyer
Gateley bigshots see personal wealth soar on flotation, but face penalties for early exit .
Gateley is to float on the London Stock Exchange, becoming the first UK firm to list itself as a public limited company. But why would a firm would look to float, and what it could mean for the industry?