SMEs paying inertia penalty of £8.7bn for business essentials

UK SMEs are overpaying for business essentials by an aggregate £8.7bn a year, according to a new report by Bionic, the business services platform.

Bionic’s Business Efficiency Index found that SMEs could stand to save £1,508 a year on their energy, insurance and telecoms spend. On average, smaller British businesses spend £3,950 a year on these three services – a combined annual bill of £22.9bn.

Bills, bills, bills

Bionic data suggests that UK SMEs are significantly overpaying on these services. According to analysis of Bionic’s 200,000 customers, businesses are, on average, overpaying on their energy, insurance and telecoms bills by nearly 40 per cent.

 

What’s more, businesses are paying over the odds at a time when they are already battling rising costs. Since 2011, the cost of taxes, rates and employment costs have spiked 15%, an increase of £60,000 a year, per business. Inevitably, some SMEs are really struggling to pay for their business-critical services. More than a quarter (26%) say that it is difficult to meet the costs for their energy, insurance and telecoms.

Time flies

SMEs are not only overpaying on their bills but are also spending too much time sorting their business admin.

The majority (64%) of SMEs spend, on average, 4 hours a week on business admin. This equates to spending a month per year (30 days) on admin alone. SMEs are wasting 3.5 days a year trying to compare the best deals for energy, insurance and telecoms.

This admin burden is creating a drag on operations. Two thirds (66%) say their business admin impacts their ability to spend time on other activities, with 8% as saying this impact is “significant”.

Understandably, the time commitments involved in analysing annual business essentials spend is putting a lot of SMEs off engaging with their providers. The fact that more than a third (34%) of small business owners or directors have not reviewed their energy, insurance or telecoms in the last year points to the high levels of inertia in the market. SMEs are missing out on significant cost and time savings as a result, to the detriment of their growth.

Commenting on the research, Paul Galligan, CEO of Bionic said, “The findings paint a picture of Bureaucracy Britain: up and down the country, what should be simple business decisions are eating into SMEs’ time, productivity and resources – they need a break from the bills.

“The good news is that many SMEs have not yet taken the first and easiest steps to trim their spend and cut the faff. Our analysis suggests that SMEs stand to save over £1,500, on average, by getting the best deal for them.

“We believe that the best businesses are driven by clear human decisions, backed up by tech. This research shows that, positively, SMEs have a huge amount of open road when it comes to adopting technology to make their lives easier. Most SMEs are at the very beginning of their tech journey and the scale of the opportunity is huge.”