Consultation outcome

Invoice finance: nullifying the ban on invoice assignment contract clauses

This consultation has concluded

Download the full outcome

Detail of outcome

We plan to stop bans on invoice assignment clauses in business to business contracts. These powers are granted to us through the Small Business, Employment and Enterprise Act 2015.

Feedback received

Detail of feedback received

We received 20 responses to the consultation. These mainly came from:

  • business representative bodies
  • invoice financiers and law practitioners

We also had some responses from large businesses in the retail and construction industry. A full list of respondents is available in Annex A of the summary of responses.

Original consultation

Summary

We’re asking for views on our proposals to nullify bans on invoice assignment terms in business to business commercial contracts.

This consultation ran from
to

Consultation description

Invoice finance allows a business to give the right to future payment to a finance provider in exchange for a loan up to the full value of the invoice. It can provide a vital source of finance if a business has to wait a long time between completing a job and receiving payment.

The ban on invoice assignment is often part of a more general ban on an assignment clause in the contract to stop a supplier from sub-contracting. As a result, a business’ access to invoice finance is often unintentionally restricted.

In December 2013, we published our discussion paper Building a responsible payment culture. This asked whether removing contractual barriers to selling invoices would be helpful to small businesses by increasing their access to different finance options. The majority of respondents agreed that it would be helpful.

We announced in the government response that we would legislate to remove these barriers to financing. Clauses 1 and 2 of the Small Business, Enterprise and Employment Bill provide the broad legislative power to do this.

We propose to introduce a regulation that would nullify any bans on invoice assignment terms in business to business commercial contracts. We want to know your views on our proposals, the draft regulations and the costs and benefits of the measure on both companies and the invoice finance market.

Documents

Measure to nullify ban on assignment clauses in a debtors terms of sale: impact assessment

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Published 6 December 2014
Last updated 9 August 2015 + show all updates
  1. Added government response.
  2. A summary of public responses has been added.
  3. Consultation closing date corrected (from 16 to 11 Feb 2015).
  4. First published.