26 August 2016

Hard on the heels of the recent report about SMEs suffering from non-payment of their invoices comes a warning that unfair contract terms with suppliers have cost smaller businesses nearly £4 billion in the last three years.

New research by the Federation of Small Businesses (FSB) suggests half (52%) of small firms have been hit.

The main problems identified are suppliers: failing to make auto-rollover clauses clear up front (24%); tying businesses into lengthy notice periods (22%); charging high early-termination fees (20%); and concealing details in small print (20%).

Pointing out that small firms on the bad end of a deal are losing out to the tune of £1.3 billion each year, FSB National Chairman Mike Cherry said: “Small businesses don’t have the time, expertise or purchasing power to scour the market to find and negotiate the best deals.”

“Treating smaller businesses like consumers — Unfair contract terms” explains that 11% of small businesses affected by unfair terms were set back by more than £5000 dealing with a single problem. Two in five (37%) lost more than £1000 through an unfair agreement with a supplier.

Available at www.fsb.org.uk, the report calls on regulators of energy, financial services and telecoms should to routinely and explicitly focus on small business vulnerabilities.

“Small business owners behave in a similar ways to consumers,” Mr Cherry said, “but they don’t have the same guarantees of quality or legal redress in an unfair situation.”