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End of the Ban on Assignment

 

An important legislative change is about to happen which will hopefully enable greater access to invoice finance. A draft Statutory Instrument under section 1 of the Small Business, Enterprise and Employment Act 2015 has been placed before Parliament for approval which contains new Regulations to nullify the effect of restrictive terms in B2B contracts that can limit access to finance for small businesses.

 

Since the credit crisis, the Government has been keen to encourage the alternative finance market, including asset-based finance, for SME’s. Following extensive consultation, the new measures will enable businesses, particularly smaller businesses lower down the supply chain, to access wider funding options by invalidating or restricting the effect of any “non-assignment of receivables term” of a “relevant contract”. 

 

A “non-assignment of receivables term” or, as it is more commonly known, a “Ban on Assignment”, is a term which prohibits or imposes a condition, or other restriction, on the assignment by a party to the contract of the right to be paid any amount under the contract or any other contract between the parties. A “relevant contract” is a c