The abolition of assignment bans and the impact on working capital finance

On 4 March 2025, the Dutch Senate passed the legislation lifting assignment bans in the Netherlands. This marks a significant development for Dutch businesses and the realm of working capital finance, also known as commercial finance.

Commercial finance encompasses various financing solutions for businesses, ranging from working capital loans to specialised credit forms such as factoring and asset-based lending (ABL). The removal of the assignment ban simplifies the process for companies to use all outstanding trade receivables as collateral, significantly improving their access to finance.¹

What is working capital finance / commercial finance?

Working capital, which primarily consists of accounts receivable and inventory minus accounts payable, is highly financeable. In particular, the financing of accounts receivable is widely accessible, either through traditional bank loans or commercial finance solutions. Commercial finance is an umbrella term for different forms of business financing that help companies secure capital for their working capital needs. These financing methods include factoring and asset-based lending (ABL), among others.

The assignment ban

Until now, businesses often encountered assignment bans that limited their ability to use trade receivables as collateral for securing finance. As a result, available financing was restricted. These bans were frequently imposed in contracts between businesses and their financiers, leading to a constraint on liquidity.

Increased flexibility and reduced dependency

With the removal of assignment bans, businesses gain greater flexibility. The commercial pressure from major buyers is reduced, as there is no longer a need to negotiate assignment restrictions. Companies can now engage in trade and enter contracts without having to pre-finance the goods they supply. This is expected to boost trade and production further.²

The abolition of assignment bans is anticipated to create significant additional financing capacity. Some sources estimate that this reform could unlock approximately €1 billion in additional liquidity for Dutch businesses (Faan, 03-2025).

Conclusion and opportunities

• Improved access to capital: Businesses can now more easily secure financing based on their trade receivables without the constraints of assignment bans. This facilitates faster access to capital for growth and working capital needs.
• Greater flexibility in financing: Entrepreneurs can now leverage various forms of commercial finance, such as factoring and ABL, allowing for a more tailored financing structure that suits their specific requirements.
• Faster approval for loans and credit: The ability to use trade receivables as collateral simplifies risk assessment for lenders, making it easier and quicker to approve financing applications.
• Expanded use of receivables and inventory: In financing documentation, there is often a link (e.g., a 1:1 ratio) between financing inventory and trade receivables. The removal of assignment bans allows for the full financing of trade receivables, which can also positively impact inventory financing.

Orchard Finance advises businesses and entrepreneurs to carefully evaluate which form of commercial finance best suits their situation and to be mindful of the potential risks and costs associated with these financing options. By staying well-informed, companies can fully capitalize on the new opportunities arising from the abolition of assignment bans.

Are you curious about the additional possibilities for your business? Contact us for a no-obligation consultation, where we can explore the optimal financing structure for your needs.

This article was written by:
Eelco van de Lustgraaf

1. Eerste Kamer ↩︎
2. FAAN ↩︎

Eelco van de Lustgraaf

Partner Corporate Finance & Debt Advisory