Small UK companies trading with the public sector have historically had cash flow management problems due to the inability to assign government receivables debt. This created a barrier for SME's trying to enter this market place. Although factoring or invoice discounting of trade debts was not specifically disallowed, in practice the relevant public sector contracting authorities never gave consent thereby limiting SME's ability to compete.
Thankfully this position changed in this years budget and it is now possible for firms supplying goods and services to government departments to assign public sector invoices to specialist debt financing lenders without prior approval. If your company would like to know more about factoring debts we recommend reading public sector debt factoring for more information.
