It has recently been announced that the ban on assignment of debt within government contracts is to be abolished.

The ban on assignment has prohibited companies from raising funds against invoices from public sector contracts. Now, after lobbying from the Asset Based Finance Association (ABFA), the Office of Government Commerce has committed to removing the standard requirement for departmental consent from their model procurement clauses. This is excellent news for owner managed businesses supplying the public sector.

Kate Sharp, Chief Executive of the Asset Based Finance Association, comments: "The ban on assignment of debts has prohibited a company which wishes to tender for a public contract from using an intermediary such as a factor or invoice discounter to raise finance without prior permission. As a result, this has prevented many SMEs, which are more likely to use such services in order to improve cash flow, from tendering for pubic contracts.

"We are pleased that 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."