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SMEs: Are you turning down work for unreasonable demands?

02 Aug 2017

They say that starting a business for the first time can be fraught with obstacles. Learning new skills that were previously looked after in the comfort of employment, late payment and negotiating self-assessment are just a few things that new owner-managers claim to be their biggest start up headaches. Finding the right contracts to get you started also isn’t easy – but possibly not for the reasons you think.

According to recent research, half of the UK’s small businesses have lost out on around £10,000 worth of contracts. Not because of late or non-payment, but due to unreasonable demands on the client’s behalf.

This is quite surprising, considering that start-ups are normally considered to be quite vulnerable in their early years of trading. Getting customers through the doors and regular payments coming in is one of the many struggles that SMEs will face. However, as many as 28% have said no to work, according to the survey, even losing out on as much as £30,000 in the process.

Manufacturing businesses are the most likely to refuse work, with 42% stating they have turned down orders on several occasions due to unfair demands of customers. Other reasons for turning down work included unfair contracts, unreasonable payment terms – or a previous history of non-payment.

Supporting small businesses has become a well-known ethos, particularly in the UK as the number of SMEs setting up shop has increased dramatically over the years – particularly since the recession. With cash flow being constantly named as a top reason for small business closure, plenty are now adopting a zero tolerance attitude on payment policies.

What’s more, setting up a business is more appealing in terms of achieving a work-life balance, unfair demands on working hours have left more business voting with their feet. Everyone knows that bad payers and unrealistic contract terms can have a huge impact on any business and turning down work is clearly the industry’s response to that mind set.

I suspect that, by choice, SMEs would prefer not to turn down this work. Around a third (27%) are currently in survival mode but it’s a fight between allocating the resource to chasing payment or just turning down the work in favour of finding customers who will pay and pay on time.

It also helps that businesses on the whole are feeling much more confident. According to the survey, 60% of companies do not feel that Brexit will impact their businesses and an even higher percentage – 66% - have not had to invest their own personal funds into their businesses in the past 12 months

If you are running a small business and you have any legal queries that you would like addressing, or you need some further advice on anything mentioned in this article, then speak to DMH Stallard today to see how we can help.

 

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