News In Brief

Lacking bounce

Few UK small businesses are ready to bounce back if they suffer a disruption to their operations, even though four out of five of those running the businesses admit they would seek alternative suppliers if they could not get the service or product they wanted immediately. This is a key finding of the Bouncebackability Index just launched by SunGard Availability Services, a provider of business continuity services. The index shows that only a third of managers of SMEs in the UK are taking steps to ensure that their business can continue to operate normally under any circumstances. SMEs within the UK would struggle to resume normal business operations in the event of a business disruption. Forty per cent would suffer total or severe impairment to business operations in the event of computer hardware failure; 45 per cent would suffer total or severe impairment to business operations following a power cut or a flood; and only 10 per cent would suffer no impairment and be able to function as normal in the event of a fire.

Cash squeeze

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Small and medium-sized businesses are being hit by a pincer movement of suppliers billing more quickly and fewer companies paying within agreed payment terms, according to research from HSBC Commercial Banking. It is urging businesses to review their finances to ensure they have the best tools in place to manage their money, whether they trade solely in the UK or do business across the globe. The research found that one in five small businesses reported suppliers are billing quicker and a further 20 per cent said that fewer companies were paying within agreed payment terms. This research follows figures from the Federation of Small Businesses showing that large firms are delaying invoice payments to smaller firms. The survey among senior decision makers of 596 small and medium-sized companies, found that many SMEs were overly reliant on their savings and overdraft to fund both cashflow and big purchases and business investment. It found two-fifths of SMEs were raiding savings and a quarter were relying on overdrafts to manage their everyday finances. About a tenth were turning to their credit card for business investment. At the same time, one in 10 were already using to invoice finance to actively manage their cashflow while 9 per cent were using leasing finance to help capitalise on their assets.

Supply problems

According to research from BT Business and Cisco, 52 per cent of private sector businesses believe that SME suppliers are less competitive than their larger counterparts. The study, developed to explore the factors influencing large businesses in choosing suppliers, shows that the same proportion of large businesses are more demanding of suppliers than they were a year ago. On a positive note, procurement managers are aware of the benefits ofworking with a smaller business. The vast majority (72 per cent) believe small businesses are well placed to offer a more personalised service than their larger competitor, with customer service and responsiveness cited in the top five reasons to award contracts. But 87 per cent say small businesses are more likely to have the personal chemistry conducive to a smooth supplier relationship, 57 per cent say they do not believe SMEs are as able to provide around-the-clock support, and 52 per cent say they are less able to offer competitive rates. The bias for larger, established businesses is illustrated by 40 per cent saying they are less likely to choose a small business supplier when times are tough.

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