Michelle Rodger: Companies could save thousands by taking the time to check telecoms bills and change tariffs

WHEN money is tight in a business, every penny counts. So it's surprising to discover that most SMEs happily pay their telecoms bill without even bothering to look at the details. It's even more surprising when you consider that the majority of us don't understand the rates or tariffs we have signed up to.

It's little wonder then that 85 per cent of us are on the wrong contract, and that we are actually paying between 20 and 50 per cent more than necessary on our monthly bills.

What do we tend to do about it? Well, if the survey results are anything to go by, the answer is very little.

According to research carried out by Market Transformations, 85 per cent of SMEs surveyed did not believe they received any quality of support from their telecoms providers, and in most cases stated that it was almost more effort than it was worth trying to get service and resolve issues or problems, particularly over billing queries.

The key business needs, identified by this research as flexibility, customer service, better value and easier to understand products, are largely being ignored by telecoms providers.

Scott Allison, founder and managing director of telecoms provider Abica, believes there has to be a better way of servicing the country's SMEs. An indigenous Scottish telecoms provider taking on the global operators is a real David v Goliath task. But the devil is in the detail and, by focusing on the SME niche, Allison aims to be the biggest and best provider of telecoms to SMEs in the UK. With former Scottish Telecom boss Rod Matthews on board as chief executive, he's backing his big plans with big guns.

His is the UK's first business-only mobile network offering corporate rates to the SME sector. He sees theirs as a different need from that of consumers and large corporates, but with enormous telecoms operators selling everything from pay-as-you-go to individuals to corporate accounts with 20,000 plus phones there is scant attention paid to the needs of our SMEs. And that's the opportunity.

Businesses need to be able to manage their telecoms spend intelligently and effectively; they need to be able to see at a glance what is spent, by whom and on what. By providing billing information as a management tool on the web, business clients can see what calls are being made. And the opportunity to change tariffs as often as necessary is key for businesses, who don't necessarily know if they will be in business in six months, let alone the 36 months of a contract from a global telecoms provider.

Entrepreneur Allison says there's a perception that all telecoms providers are as bad as each other. It's a highly competitive market, but to differentiate on not being as bad as the competition is pretty poor.

Independent telecoms broker Peter Menzies claims 85 per cent of people in the UK are on the wrong deal; some out of ignorance and a genuine lack of understanding of rates and tariffs, complex bundling practices and usage restrictions, others because it is too embarrassing to admit making a purchasing mistake.

Menzies, managing director of IMPC in Dundee, cites one example of a financial controller whose two-year telecoms contract was up for review. Menzies highlighted a potential saving of 24,000 if the company swapped providers but the financial controller chose to remain with the incumbent operator. Why? Menzies says it was too embarrassing a mistake to admit to her board.

For those who don't mind being embarrassed if it saves the company money, Menzies has some simple but effective advice. Work out exactly what each phone is being used for and by whom. Produce a spreadsheet that details the information and work out what your requirements will be. Then separate out the network provision from the equipment provision. You can save money by using two different providers for this.

And remember, not everyone needs a hi-tech all-singing all-dancing handset. If your employees work on a building site, then they need sturdy rubberised models; much cheaper than the BlackBerries you would provide for your IT team or your sales force.

He also warns against signing up for too many inclusive minutes because in most cases, you then won't be able to downgrade for the duration of the contract. Instead, sign up for less and then upgrade the tariff safe in the knowledge that at any point you can downgrade again.

Loyalty discounts could actually be disguising higher costs and if you're offered a mid-term upgrade you should know that you will be extending your contract beyond the 24 or 36-month contract currently in place.

And if the phone doesn't work, or the broadband is slower than promised, don't be scared to tell your provider to cancel the contract. They will tell you that you can't, but you can. Use Trading Standards or Ofcom, and tell them you will take your case to the Office of Fair Trading.

The Federation of Small Businesses is aware of the issues, and regularly warns SMEs to shop around for the best telecoms deal. Andy Willox, FSB Scottish policy convener, admits that most small firms don't have the time to go through pages of small print in their contract, or don't believe it is worth their time. The FSB is calling for a more transparent system, where small firms can see exactly what they are paying for and what they're going to receive.

Meanwhile if, as Scott Allison says, the only reason you retain customers is because they are contracted to you, you've not done your job properly.