Smaller firms take £4bn hit from suppliers

Billy Bambrough
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FSB chairman Mike Cherry branded the contracts “unfair” (Source: Getty)

The UK's small firms are battling against contract terms with suppliers that have cost them over £4bn in the last three years.

New research from the Federation of Small Businesses (FSB) has found 2.8m small firms have suffered because of what the FSB calls “unfair” contract terms.

Complaints raised by small business owners to the FSB include: suppliers failing to make auto-rollover clauses clear up front; tying businesses into lengthy notice periods; charging high early termination fees, and concealing details in small print.

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One in ten small businesses affected by unfair terms were set back by more than £5,000 dealing with a single problem. Two in five lost more than £1,000 through an unfair agreement with a supplier.

“Small firms on the bad end of a deal are losing out to the tune of £1.3 billion each year. We have identified persistent problems with suppliers, across sectors, treating small firms unfairly. This suggests the market is failing to deliver value for money products and services for small business customers,” said FSB national chairman Mike Cherry.

“Small businesses don’t have the time, expertise or purchasing power to scour the market to find and negotiate the best deals. Small business owners behave in a similar ways to consumers, but they don’t have the same guarantees of quality or legal redress in an unfair situation.”

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Earlier this month it was revealed the gap between how long it takes large and small businesses to be paid by customers is still widening.

Smaller firms were found to wait almost double the length of time as their larger counterparts, research from the Asset Based Finance Association showed.

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