LONDON, Oct 23 (Reuters) - The government said on Tuesday some of Britain’s biggest companies may adopt a scheme to help suppliers access cheaper borrowing.
Small businesses have been hit particularly hard as banks, facing higher capital requirements, rein in lending.
Various government schemes to improve the availability of financing have so far done little to boost the economy.
The supply chain finance scheme, already used by Rolls Royce and Vodafone, involves large companies notifying a supplier’s bank that an invoice has been approved for payment.
The supplier can then borrow against that invoice at a lower rate that it might otherwise have been able to achieve.
John Walker, the national chairman of the Federation of Small Businesses, said the scheme could help make available working capital and tackle the problem of late payment.
“Nearly three quarters of small businesses report that they have been paid late in the past year, placing a huge strain on cash-flow and meaning they struggle to realise ambitions to grow,” he said.
The government said that 36 other companies, including Britain’s biggest retailer Tesco, fixed-line telecoms firm BT and pharmaceutical company GlaxoSmithKline , had agreed to consider taking part in supply chain financing.
Companies could deliver as much as 20 billion pounds in cheaper finance to their suppliers, a calculation the government said was based on the amount of credit between the interested companies and their suppliers at any one time.