Small businesses lost between £3bn and £5.75bn of vital funds in 2020 because annual contract and subscription services were renewed without their knowledge.
Auto-renewals are an issue with most (60 per cent) small businesses. The reason for this is that there seems to be a communication problem between the service providers and clients. Over a third (37 per cent) said they lost money through an auto-renewal that they weren’t aware of and 34 per cent were unaware of services being on a rolling contract when they signed up.
Business insurance is the most common type of contract to renew unintentionally, ahead of broadband/WiFi and phone contracts. Eight in ten pointed to businesses necessities like insurance, WiFi or utilities having the least flexible terms. Over three quarters (76 per cent) of small businesses have signed up for a yearly contract just so they could use the service that one time.
>See also: Small business insurance: An essential guide
Frustration is high amongst business owners who believe that they are ‘locked in’ to too many contracts with no little to no room for flexibility. The research from Superscript shows that 82 per cent of respondents said their current annual contracts and subscriptions are too inflexible. On average, up to half of small business’ annual subscriptions are totally locked, with 84 per cent of businesses saying that they would like to be able to amend contracts and subscriptions on a monthly basis.
Cameron Shearer, co-founder and CEO of Superscript said: “The pandemic has impacted small businesses disproportionately. Many are having to count the pennies to survive on a day-to-day basis. It does not help, therefore, that so many are having the wool pulled over their eyes by service providers that are automatically renewing annual subscriptions without explicitly communicating that they are about to do so. They are losing much needed cash unnecessarily, and this is not a sustainable way of doing business.
“For the new normal, we should be empowering small businesses to thrive by being flexible enough to work on their terms; not forcing them into contracts that don’t suit them. The future is monthly, customised subscriptions that small businesses can amend whenever the need arises.”