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Disputes cost small businesses in England and Wales at least £11.6 billion each year

By Rebecca Milligan

New research into the cost of disputes by the Federation of Small Businesses reveals how expensive they are for small businesses.
chess set, hand holding white king knocking over black king, dispute, conflict

Disputes are costing small businesses in England and Wales at least £11.6 billion each year, according to research by the Federation of Small Businesses. The report finds that 70% of small businesses have faced at least one legal dispute in recent years, most of which are the result of late or non-payment. The report says the average amount under dispute is £18,000.

Obviously no one aims to end up in a dispute, but this new research highlights how very costly this can be for small businesses.  Our experience of dealing with consumer and trader complaints and working with ombudsman arbitration services leads us to believe that you can often protect yourself from disputes by following clear procedures and ensuring that all agreements are made in writing.

There will always be occasional situations where, whatever you do, you cannot prevent a dispute, but in many cases you can dramatically reduce the likelihood of a dispute by following a few simple guidelines:

  • Hand all customers a copy of your terms and conditions and the Which? Trusted Traders code of conduct when you issue a quote.

  • Ensure all contracts are made in writing – with suppliers and customers.

  • Agree as much detail as possible concerning a project, such as timescale, payment schedule, access expectations, how often you will update your customer and so in, in in advance. Set this down in the initial contract so each party has clear expectations.

  • Keep clear records of all work undertaken, products purchased, invoices and sales notes associated with any job, so you can produce them if necessary.

  • Keep visual records of work done, the condition you find a property and how you leave it.

  • Never undertake any work without clear written agreement – even if it is only a small ‘extra’ that has cropped up during the course of a project. You need to let your customer know how much it will cost and get their written agreement to it.

  • Always try to keep the lines of communication open.

  • Keep emotion out of any exchange with a supplier or a customer.

  • If the relationship breaks down, point your customer towards the ombudsman service who will act as an independent arbitrator.

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