Following recent insolvency figures announcing a rise in company insolvencies, Business Debtline, the free, independent advice service for small and micro businesses, is warning that there are many thousands more small businesses across the UK struggling with their debts.

Last year Business Debtline spoke to a record number of small business owners and directors. In all, Business Debtline advisers answered nearly 38,000 calls – a highest number in the service’s history – from 26,000 small businesses, of which 6,181 had debts of over £50,000.

Nicola Connop spokesperson for Business Debtline said: “Our team of advisers speak to thousands of struggling small businesses every month. Many of these businesses have been hit by the tough economic climate, with lots of callers pointing to trade shortfalls, late payers and supplier issues as the reason for their difficulties. It is clear to us that the difficulties faced by small businesses extend far beyond the insolvency figures announced today.

“Whilst insolvency can seem like a daunting process, there are occasions where it will be the best option, both financially as an individual, and also with a view to trading again in the future. Business Debtline can help small businesses identify when insolvency might be a sensible move. Where it isn’t the right option, we can help small businesses get back on their feet.”

Business Debtline is open 9am – 5:30pm Monday to Friday. Call 0800 197 6062 for free, independent and confidential advice.

Total bank lending to firms outside of finance and real estate must more than double in order to meet the investment needs of the UK economy over the next decade, says a new TUC report.

The TUC report Banking after Vickers says that government has identified £450 billion-worth of physical investment, vital to the UK over the next decade. But with the current stock of bank loans to non-financial firms (excluding real estate) at just £322 billion, banks would need to more than double their current level of lending to meet UK investment needs. This simply won’t happen without radical reform of the banking sector, says the TUC.

Banking after Vickers says that since 2008 the main focus of debate on banking has been preventing a repeat of the crash and subsequent taxpayer bailout, addressed by the Vickers Commission, and the remuneration of top bankers.

But with the UK’s growth prospects dependent on greater investment and access to credit, particularly for SMEs, the report argues that reforming the banking sector so that it better supports the real economy is the most vital banking issue facing the UK.

The report sets out four challenges facing the UK banking sector: low investment, SMEs, sectoral and geographical rebalancing of the economy and green growth.

Banking after Vickers shows that the UK’s level of investment has been either the lowest or second lowest in the G7 for 30 years, and that the banking sector has a poor track record of lending outside of real estate and finance.

While credit easing and the Green Investment Bank are positive first steps towards encouraging more lending, they fall well short of the level of investment the UK economy needs, says the TUC.

TUC General Secretary Brendan Barber said: “Much of the media and political debate around banking has been on top bonuses and preventing another financial crash.

“But while these are both important issues, people are more concerned about jobs, better wages and healthier businesses – and banks have a vital role to play in creating all this.

“Decades of under investment, compounded by banks’ poor track record of lending outside of real estate and finance, have left the UK economy dangerously lopsided. Our economy is far too focused on finance and banking, and in the South East.

“Greater lending to SMEs and support for green investment is vital to our future economic prospects but our current banking system is woefully ill-equipped to lend.

“Bold new ideas are needed to reform the banking sector so that it returns to its proper place as the engine of wider economy growth, and not as the cause of an economic depression.”

 

A flexible office service has been launched in the UK, enabling professionals to use fully serviced workspace on a pay-as-you-go basis.

Dayoffice Card, the brainchild of former Regus sales director Matthew Stubbs, enables start-ups, SMEs, sole-traders and companies with a mobile workforce to occupy office space at more than 150 business centres across the country on a pay-as-you-go basis – keeping overheads low and productivity high.

The business enables people to buy individual days as and when they’re required, or for customers to opt for a pre-paid membership plan for a fixed number of days per month, be it two or 22.

Stubbs, managing director of Dayoffice Card, said that the business had launched at an optimum time, as financial forecasters suggest that the economy is entering credit crunch for the second time in five years.

“The past five years has seen an enormous number of start-ups launch and businesses of all sizes are examining expenditure as they undertake cost-cutting measures in order to survive the next wave. Underutilised office space represents a gulf when it comes to wasted expenditure.

“The last economic crisis led to an increase in mobile and home-based workforces as spending-savvy companies became more dependent on smartphone technology and other mobile devices

“We recognised a niche in the marketplace and Dayoffice Card was established with the aim of connecting professionals who won’t or can’t justify a full time office. Dayoffice Card is very much a cost effective solution for start-ups and SMEs that are home-based or operate a mobile workforce.  It’s especially useful for those needing a more professional environment for client meetings or to complete a project free from distraction,” he said.

Dayoffice Card already operates in London and 100 other major cities and towns including Edinburgh, Birmingham, Manchester, Leeds, Cardiff, Liverpool and Sheffield, offering prestigious addresses in the heart of each city as well as office solutions in surrounding towns and business parks.

The latest figures from Experian reveal that during the final quarter of 2011 the payment performance of UK firms saw a small but positive improvement from 26.17 days in Q3 2011 to 25.97 days, with the biggest improvements coming from the largest firms.

Firms with 101 to 500 employees paid their invoices three quarters of a day faster than in the previous quarter (from 25.84 days to 25.07 days), while firms with more than 501 employees improved by two thirds of a day (from 34.77 days to 34.12 days).

These businesses also led the way in improvements when compared to their payment performance in Q4 2010. Firms with more than 501 employees settled their invoices almost two days faster while firms with 101 to 500 employees improved by almost three quarters of a day – from 36.06 days and 25.79 days in Q4 2010, respectively.

Jason Mills, head of payment performance at Experian UK & Ireland, said: “Payment performance is the timeliest indicator of the current health of any business, so the overall improvement suggests that during the last three months of 2011, pressure on cash flow and finances was more manageable for most businesses.

“Feedback from our larger customers demonstrates awareness and understanding of the struggles faced by some of their key SME suppliers so are prioritising payments to them, to better support them.

“The only firms to see an increase in their payment performance from Q3 to Q4 were firms with three to five employees. The increase, however, was very small and is a timely reminder for smaller firms to credit check potential new and current business customers for signs of possible non-payment before it is too late.”

The Chartered Institute of Taxation (CIOT) has expressed disappointment at the approval by Parliament of a measure which will impose significant additional burdens on some small firms.

The Enactment of Extra-Statutory Concessions Order 2012, passed on Monday afternoon by the House of Commons First Delegated Legislation Committee, gives legislative effect to six extra-statutory concessions (ESCs), including ESC C16, which deals with the tax treatment of distributions to shareholders when a small company is dissolved.

The CIOT and the Institute of Chartered Accountants of England and Wales had written jointly to Exchequer Secretary David Gauke, the Labour Treasury team and other members of the committee considering the legislation asking them to withdraw or reject the legislation to allow it to be amended. Although some of the concerns of the two bodies were referred to during debate, the committee passed the proposal without a vote after just 20 minutes of discussion.

Andrew Gotch, chairman of the CIOT’s Owner Managed Business Sub-Committee, said:

“It is extremely disappointing that the Government has chosen not to listen to the concerns of the tax profession and small business and have pushed this measure through.

“Currently ESC C16 provides a simple, straightforward and inexpensive way for a company to be wound up at the end of its life without the need for a formal liquidation, but with the same tax consequences as if it had been liquidated. However, the Government has brought this concession into law in a way that is far more restrictive, limiting it to companies whose total distributions come to no more than £25,000.

“The effect of this will be to impose significant additional financial and administrative burdens on small and medium-sized businesses, directly contrary to the Government’s stated policy in this area.”