Regulators in the UK have recently proposed a ban on unfair contract agreements for SME’s. Currently UK corporates can include terms with their suppliers that prevent those businesses from borrowing against unpaid invoices – that is, using invoice finance. This initiative is one of a series of measures by the UK Government to combat late payments and create better conditions for small suppliers to larger organisations.
In NZ and Australia, we have sometimes heard about larger corporates making it difficult for their suppliers to access short term finance by using debtor finance. This can increase the already large imbalance in the commercial relationship and may even cause unnecessary cash flow stress in smaller businesses. Every b2b small business owner has experienced the anxiety of waiting for bills to be paid.
In most circumstances, this imbalance just requires a quick conversation between the SME and its customer (Apricity can assist here) to gain the larger corporate’s consent. However, we would love to see similar laws introduced in NZ and Australia. These smaller businesses form the backbone of both countries’ economies and deserve all the help and support they can get.
Invoice finance can be such a useful tool for growing businesses. It leverages the cash that’s ‘coming in’ and, if kept simple (like we always try to do at Apricity), business owners won’t have to put at risk personal assets or be forced to take on extra debt (e.g. lock-in contracts and hidden fees).