More than one in three (39%) small to medium transport businesses have turned down contracts and orders as they cannot deliver the work, new research has revealed.
The study, from Hitachi Capital Invoice Finance, shows that the predominant causes of such enterprises having to say no to contracts in the past year are: jobs not paying enough (38%), unfair payment terms (36%) and lack of management time (30%).
Of 501 business owners questioned, 54% of those in the transport sector said ‘yes’ when asked if they have ever had to turn down a contract solely due to a lack of finance. More than a quarter (27%) of transport companies turned down seven or eight orders in the past year, which is significantly higher than other sectors surveyed, who on average turned down just one or two job opportunities during the same period.
Outlook remains positive however, with over 60% of transport companies agreeing they don’t think that Brexit will impact on them rejecting more, or acquiring less work in the years ahead. This was an attitude found amongst the majority (60%) of companies surveyed.
Of the 501 business owners surveyed nearly half have lost out on up to £10,000 in the past year due to rejecting contracts, with initial ‘start-up’ businesses at the most risk, with 28% having lost between £20,001 and £30,000 by doing so.
Andy Dodd, Managing Director at Hitachi Capital Invoice Finance, commented, “SME’s are unfortunately having to decline contracts and orders due to unfair payment terms and unreasonable asks, not because they can’t deliver the work. 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, not all business owners have the time and resource to chase up invoices or can risk working with an unreliable supplier. Our research from November last year found that 27% of SMEs are in ‘survival mode’ with investment plans on hold, highlighting how SME’s simply cannot afford to be turning down work, which more than half are currently doing.”
Andy adds: “Our credit control services takes away the worry for the small business owner allowing them to focus on bringing in revenue by taking on new contracts. They can also choose to release cash from their invoices allowing them to invest the money back in to the business. It’s important that SME’s are made aware of the solutions available to them, so they can take on new contracts and stop turning work down unnecessarily.”
For the full SME Contract Rejection white paper report, visit hitachicapital.co.uk/contract-rejection
Census Wide surveyed 501 businesses in May 2017.