A new report from Hitachi Capital Invoice Finance says small- and medium-sized businesses are losing out on money because they’re saying “no” to jobs and contracts they consider unfair.
The research, released Thursday (June 8), found nearly half of U.K. SMEs have turned down a job because they could not deliver on the order or contract because it was unreasonable. A quarter said the contract wouldn’t pay enough, and nearly the same portion said they turned down the job because the client was known to be a bad payer. More than a fifth cited unfair payment terms as the reason they gave up the gig.
Half of SMEs surveyed said they had lost out on about $13,000 in the last year alone because they had rejected a contract. More than a quarter said they had lost as much as $39,000 last year because of turning these jobs down.
“SMEs are unfortunately having to decline contracts and orders due to unfair payment terms and unreasonable asks, not because they can’t deliver the work” said Hitachi Capital Invoice Finance Managing Director Andy Dodd in a statement. “Bad payers and unrealistic contractual terms can have a huge impact on any business, especially those that are relatively small or in start-up.
“This is often part of a wider problem,” Dodd continued. “Not all business owners have the time and resources to chase up invoices or can risk working with an unreliable supplier.”
Dodd cited the survey that found 27 percent of SMEs say they are in “survival mode,” forced to put investment plans on hold. That statistic highlights “how SMEs simply cannot afford to be turning down work, which more than half are currently doing,” Dodd said.
According to researchers, the manufacturing industry experiences this dilemma the most, with 42 percent of SMEs in this industry saying they have turned down jobs because of unreasonable customer demands. Retail and wholesale, meanwhile, are in the “healthiest” positions and less likely to turn down gigs.