Small businesses have hailed Alistair Darling’s decision to lift the ban on assignment of debt within government contracts as ‘welcome news’.
The move, which was revealed in the strategy paper ‘Enterprise: unlocking the UK’s talent’, means companies which had been prevented from raising funds against invoices from public sector contracts will no longer lose out.
The Asset Based Finance Association (ABFA) said they had previously lobbied the Office of Government Commerce to make the commitment commit to removing the standard requirement for departmental consent from the model procurement clauses.
The decision will affect existing and new contracts and means thousands of companies using invoice finance will now be able to compete on a level playing field for government tenders.
Kate Sharp, the group’s chief executive, said the ban had prevented many small businesses from tendering for public contracts.
”We are pleased the government has taken on board our comments and recognised that factoring and invoice discounting is an important source of finance to a large number of UK companies,” she said.
"We are grateful to the ministers and officials we met who have listened to what we have said, and will continue to engage with those responsible for revising the guidance over the next few months."
© Crimson Business Ltd. 2008