The Government is proposing new laws to help support businesses against unfair contracts that can stop them raising money from unpaid invoices.
The new laws will make it easier for smaller businesses to access invoice finance, and will provide a long-term boost to the economy worth around £1 billion.
The measures form part of the Government’s modern Industrial Strategy which aims to build an environment where small businesses can thrive.
Small Business Minister Kelly Tolhurst will put forward new laws in Parliament to arm small businesses against unfair contracts that will stop them gathering funds from unpaid invoices.
Currently, a small supplier’s contract with a larger company may prevent them from securing invoice finance from providers such as banks and other investors.
These restrictive contract terms are often used by larger businesses to maintain a hold over their suppliers, with small suppliers often unable to negotiate changes to the proposed contract because they do not have enough power in the marketplace.
The new laws propose that any contractual restrictions entered into after 31 December 2018, with certain exceptions, will have no effect and will be disregarded by small businesses and finance providers. It is hoped that this will stop larger firms abusing their market position.
Small Business Minister Kelly Tolhurst said: “The UK’s 5.7 million small businesses are the backbone of our economy and central to our modern Industrial Strategy, with more than 1,000 starting up every day.
“These new laws will give small businesses more access to the finance they need to succeed and will help ensure they have a level playing field from which to set fair contracts with the businesses they supply.”
For professional advice on securing funding for your business, contact Simon Crack today.