Business Minister Mark Prisk today discussed supply chain finance as part of government’s attempts to alleviate finance barriers for small and medium-sized businesses.
The Conservative MP for Hertford and Stortford’s meeting with heads of private businesses and finance experts today is the first reaction to the 160 responses garnered from the green paper consultation, Financing a Private Sector Recovery, which finished last week.
One of the suggestions government received was to enable more supply chain finance – generally where businesses borrow against approved invoices, covering working capital while payments filter through.
The Department for Business, Innovation and Skills said the identity of others present at the meeting is confidential but that they consist of “people who know about supply chain finance and could discuss how it works and what barriers need to be overcome to make it more available.”
“Today’s meeting was informative and useful,” said Prisk. “Supply chain finance is clearly an option that all large corporates should consider providing. It is one option that could help plug the funding gap of their suppliers while looking to cover working capital as they await payments. I look forward to further productive discussions on other finance options.”
Though previously popular, invoice financing has suffered something of a tarnished reputation in recent years with many suggesting the deals do not constitute value for money after the bank takes its cut. However, earlier this year NatWest chairmna of small businesses Peter Ibbertson contended that the bank could offer up to 90% of invoice value in some cases and this would be superior to amny other rates of financing.
Government says it will release its full response to the green paper shortly.