Commercial Disputes Costing Small Firms £11.6bn A Year, With Late Payments To Blame
70% of small businesses have had at least one commercial dispute, with just 19% ending up in court
Commercial disputes are costing UK small businesses £11.6bn a year, and late payments are to blame – according to a report by the Federation of Small Businesses (FSB).
Their report Tied Up: Unravelling the dispute resolution process for small firms has revealed that 70% of small businesses have had at least one commercial dispute in their lifetime, with the average amount under contention being £18,000.
When asked about what was the reason for the dispute, 70% of survey respondents cited late or non-payments as the main factor.
In terms of resolving the issue, 43% of firms engage in formal or informal negotiations with the offending party, 19% take the matter to the civil courts, while 8% seek an alternative resolution.
Despite many firms taking the required action, 17% of respondents say their issue was never fully resolved.
Mike Cherry, FSB national chairman, said:
“Disputes are inevitable in business, but many small firms don’t have the time or resources to deal with them effectively.
“The dispute resolution process faced by small businesses in England and Wales is costly and complicated. Billions of pounds are flowing out of small business pockets as they try to claw back unpaid debts.
“Small firms are not legal experts, and struggle to navigate the alternative dispute resolution market. The English and Welsh courts are slower and more expensive than many comparable countries.
Struggling with late payments as a small business owner? Here’s how to deal with them.