'Greedy' suppliers overcharge small businesses by £3.6 billion

8 September 2011

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8 September 2011 | Helen Gilbert

Small businesses are being overcharged to the tune of £3.6 billion by “greedy” suppliers, according to a survey.

Firms with fewer than 10 staff are paying up to three times more for goods and services compared to larger companies, the research conducted by business-to-business group buying website Huddlebuy found.

A survey of more than 100 service providers - ranging from design and marketing firms to office cleaning companies - showed small businesses were typically missing out on discounts of more than 70 per cent or more due to reduced purchasing power. Some small firms spent £1,825 more than necessary, while others forked out £4,000, the findings showed.

The professional services sector emerged the worst culprit overcharging small companies by £1.4bn. Those providing construction services charged an extra £830m, while the information and communication sector billed small businesses £306m more over the year.

Small companies in London and the South East were particularly vulnerable and overcharged by £1.3bn, the research found. Other regional hot spots include the East of England (£390m) and the North West (£368m).

“The results of this research are simply shocking,” said Saurav Chopra, CEO of Huddlebuy. “Small businesses fighting desperately to survive in harsh economic times are being ripped off by greedy suppliers, while big businesses enjoy huge savings from their favoured suppliers.”

A spokesman for the Federation of SmallBusinesses said the issue of overcharging was “highly relevant to general small business operations”.

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