Mid-size companies losing out on billions

Scotland's mid-market businesses are losing out on billions of pounds of revenues due to a failure to adequately mitigate risks directly within their control, research today suggests.

Phil Charles, Scottish head of KPMG Enterprise. Picture: contributed

Accountancy giant KPMG quizzed more than 200 leaders of mid-sized businesses across the UK on their approach to mitigating risks relating to their workforce, customer base, supply chain, data security, regulation and tax compliance.

Some 41 per cent of those surveyed expressed concern they have an over-reliance on a small group of suppliers within their supply chain – leaving them at greater exposure to price increases, changes in commodity prices and quality control issues.

This is in spite of 38 per cent of mid-market businesses – classed as those with a turnover of between £10 million and £500m – experiencing a failure in their supply chain over the last 12 months, with each incident costing the company, on average, 0.95 per cent of their revenues.

And despite half of respondents stating the threat of losing major customer accounts was their most pressing day-to-day concern, over a quarter admitted they rely on their top five customers for more than half of their turnover, leaving them exposed to the risk of bad debt.

The study put the cost to Scottish firms of failing to adequately mitigate risks at £3.8 billion last year. Phil Charles, head of KPMG Enterprise in Scotland, said: “Relying on a small pool of suppliers is a particularly common vulnerability amongst middle market companies.”