Businesses choose a number of different suppliers for a range of reasons, and the success of many small businesses may well rest on the decisions they make on using suppliers. Choosing a supplier on price alone is not always the best decision. For example, if your supplier is continually late this will have the knock on effect of making your product or service unreliable for your customers. So the business needs to look to use efficient suppliers. Also, there is a need to work with a selected and smallish group of suppliers so that the company’s business can be significant to them and put you in a position to negotiate good terms. On the other hand, relying on too few suppliers can leave the company vulnerable.

For some people working as freelancers or contractors instead of choosing to set themselves up as a limited company and deal with all the paperwork and administration that this entails choose to use umbrella companies as suppliers. In essence, umbrella companies act as an employer to contractors who are working under fixed term contracts. So instead of processing their own paperwork umbrella companies sort out tax and NI and the contractor is just responsible for submitting time sheets and expense claims, and then will be paid through their payroll system.