According to a new survey, disputes between businesses in the UK is thought to cost around £11.6bn a year.
The Federation of Small Businesses (FSB) surveyed its members and found that 70% had been involved in at least one dispute between 2010 and 2015. Around three quarters of them were 
because of late payments.
Between 2010 and 2015, disputes resulted in around £62bn worth of late payments. On average, small businesses are owed £18,000. Some will be facing up to £17,000 in costs related to chasing debts.
National Chair of the FSB, Mike Cherry said that: “Disputes are inevitable in business, but many small firms don’t have the time or resources to deal with them effectively. The dispute resolution process faced by small businesses in England and Wales is costly and complicated. Billions of pounds are flowing out of small business pockets as they try to claw back unpaid debts.”
The FSB would like to see an improved system so that disputes between businesses can be resolved faster. They have been calling for a small business commissioner to be appointed. The government has responded and agreed to this but they are not due to start work until autumn this year.
Transparency needed in business deals
The Department for Business, Energy and Industrial Strategy has put forward a measure for payment reporting for large businesses. From April next year, large companies will have to publish details on how quickly they pay suppliers twice a year.
The minister for small business, consumer protection and corporate social responsibility, Margot James said: “By shining a light on how large businesses pay their smaller suppliers, we want to empower small businesses and drive a real change in payment culture.”
Handling disputes
In order to help the government deal with the issue of commercial disputes, the FSB report offers some recommendations. They recommend that the alternative disputes resolution (ADR) should be reviewed for small businesses.
This is used when disputes can’t be settled informally but don’t end up in court. Instead they involve a neutral third party in order to come to an appropriate resolution. However, only 8% of companies use ADR.
43% of small businesses usually deal with the dispute informally. This can be done privately or through an advisor like an accountant or a solicitor.
19% took a recent dispute to court and 17% were left with their dispute unresolved. That’s almost half a million businesses.
The FSB went on to suggest that the civil court fees system should have a rethink. They suggested that a specialist commercial track be introduced in order to make legal fees cheaper for small businesses.
Have you ever had a business dispute over late payments? What do you think about what the government and FSB are trying to doing? Let us know what you think in the comments below!