The new rules will come into force effective April 2016. Invoice finance allows businesses to raise cash against unpaid invoices, enabling them to operate without having to wait for clients to settle accounts.

The Department for Business, Innovation and Skills decision stated: ‘A supplier’s commercial customers are currently able to contractually bar invoice assignment. This can raise the cost of, or even prevent access to, invoice finance. This is why we will nullify contractual terms which seek to prohibit assignment of invoices.’

Figures from the Asset Based Finance Association (ABFA) show that in the third quarter of 2014, £18.3bn worth of invoice finance was being used by businesses, half of which is borrowed against the value of SME invoices, an 18% increase on the same period two years ago.