Invoice finance market 'to be expanded'

12/03/2008

Small businesses that supply the public sector could benefit from changed rules regarding borrowing against this type of contract.

According to the Financial Times (FT), the move could benefit entrepreneurs and owners of new firms who need to build their business.

The government is set to unveil an enterprise strategy that includes freeing businesses to borrow against the value of their public sector contracts.

It will also provide opportunities for factoring companies.

More than 48,000 businesses currently use some sort of invoice finance system, according to figures by the Asset Based Finance Association (Abfa), the FT stated.

Abfa chief executive Kate Price told the newspaper: "We have never understood why the government has prevented companies from assigning the debt from contracts.

"It is a bit like someone going to buy a bed and the man in the shop saying you cannot use an overdraft to buy it."

The publication went on to report that the invoice finance market could be set to grow as a result.

Factoring can help companies balance the time it takes to get an invoice paid.

Recent figures from Cattles Invoice Finance show north-west businesses lose more than £12,000 in unpaid invoices every year.