Reed Smith Client Alerts

The draft Business Contract Terms (Assignment of Receivables) Regulations 2017 (the “draft Regs”) have been published. Gone is the complexity of the original draft, and now we have a straightforward piece of legislation which will be warmly welcomed by receivables financiers, block discounters and, in turn, their customers. The regulations are made under a power contained in section 1 of the Small Business, Enterprise and Employment Act 2015 (“SBEE”).
Nothing in the draft Regs would affect the commercial negotiation between financier and customer as to the purchase price of a receivable, the applicable rate of purchase commission or the appropriate allocation of any surplus after the prepayments have been recovered. However, the legislation will remove the need for extensive due diligence of a customer’s underlying contracts and should facilitate faster transaction execution and a shorter list of eligibility criteria which otherwise limit the level of receivables available to be funded.