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The UK government is considering new laws to arm small businesses against unfair contracts that prevent them from raising money from unpaid invoices. “Invoice finance” means they can raise money early on before an invoice is paid by assigning their right to be paid to a finance provider. The amount is usually 80% of the value of the invoice. The balance is paid, minus fees, when the invoice is paid in full. “Under the new proposed laws, any such contractual restrictions entered into after 31 December 2018, with certain exceptions, would have no effect and could be disregarded by small businesses and finance providers, which will help stop larger businesses from abusing their market position,” says Gov.UK. SMEs often agree to these terms owing to their weaker negotiating position; it is these contract terms that the regulations will address. Read more here.

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