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.

One in 10 (11 per cent) small business owners have experienced difficulties paying their tax bills. A further seven per cent have even missed a tax payment in the last 12 months as they haven’t been able to raise external finance.

Paul Aitken, CEO of personal asset lender borro commented: “The deadline is fast approaching for people to submit their self-assessment tax return. People who find themselves with a larger than expected tax bill or waiting to claim tax allowances, may need short-term finance – either for themselves or their business.

“Tax related applications to borro have already increased by 39 per cent from 2010 to 2011 and we expect this trend to continue.”

Retail sales fell in the year to January, after modest growth last month, and sales were considered poor for the time of the year, the CBI said.

According to the latest monthly CBI Distributive Trades Survey covering the first two weeks in January, 44 per cent of retailers saw sales volumes fall on a year ago, while 22 per cent reported a rise, giving a balance of -22 per cent. This was the lowest since March 2009 (-44 per cent), but was broadly in line with expectations (-18 per cent).

Retailers reported sales were disappointing for the time of year (-20 per cent) and orders were also down (-14 per cent), with firms expecting levels to fall again next month (-23 per cent). Stock levels remained constant, but fairly low, in line with recent months (+10). Retailers expect annual sales volumes to continue to fall in February, albeit it at a slower pace than this month (-10 per cent).

There was a mixed picture across the sub-sectors, but with most reporting a fall in sales volumes on a year ago, including hardware & DIY (-80 per cent), durable household goods (-100 per cent) and non-specialised retailers such as department stores (-34 per cent). Grocers saw a modest increase in sales (+6 per cent), following a much stronger trading period in December (+52 per cent). The non-store category, which includes online and mail-order, performed well (+50 per cent).

Ian McCafferty, CBI chief economic adviser, said:

“Shoppers have reined-in spending across the board at the start of the New Year after taking advantage of early discounting last month, which boosted pre-Christmas sales.

“Family budgets are under continuing pressure with inflation still high and wage increases modest.

“Consumers are still holding off particularly from buying big ticket items like washing machines and fridges. Online and mail order sales were the only areas that performed well in January, but growth was still down on last month.”

Among wholesalers, 59 per cent saw sales volumes rise, while 22 per cent reported a fall, giving a rounded balance of +36 per cent, exceeding expectations of -2 per cent. Sales are expected to increase again next month (+24 per cent).

Motor traders saw sales volumes fall for the 13th consecutive month (-9 per cent), and a similar decline is expected next month (-12 per cent).

HSBC has announced a number of commitments aimed at supporting UK businesses in 2012.

The bank will continue to provide support for businesses which trade or aspire to trade internationally and commits to providing lending facilities to support business growth and job creation.

The bank has confirmed that it met its Merlin lending intentions in 2011, which were agreed with the UK Government, exceeding the full year target to provide £38.8 billion of lending facilities to UK business customers and supplying gross new lending facilities of more than £11.7bn to Small and Medium-sized Enterprises (SMEs).

Having met its Merlin intentions in 2011, HSBC plans to lend even more to SMEs in 2012, providing there is suitable demand. In addition, to reinforce the bank’s strategy to be the leading international trade and business bank, HSBC will further support UK businesses by committing to:

• Recruit around 50 additional International Commercial Managers, ensuring customers involved in overseas trade are fully supported. This will bring the total number of International Commercial Managers to 180;
• Support export trade to the tune of £7 billion through our Trade Finance capabilities;
• Look to manage £30 billion of invoices for customers trading within the UK or internationally, providing critical working capital for these customers;
• Look to approve at least 80 per cent of applications for finance from SMEs; and
• Extend the availability of HSBC’s International Business Overdraft, which offers reduced interest rate for each overseas country a small business is trading with, up to a maximum discount of three per cent for the first 12 months.

Jacques-Emmanuel Blanchet, head of commercial banking UK at HSBC, said: “HSBC is committed to supporting UK business. In 2011, the Merlin intentions gave focus to SME lending, and we continued to enhance our support, launching new innovative products and holding hundreds of events across the UK and the world, to encourage UK businesses to share their knowledge and develop long term relationships internationally.

“In 2012 we will further increase our support for SMEs looking to grow and internationalise, across all sectors and all regions. Many of our customers are experiencing growth by trading in new markets and we are very well placed to support this, through our growing team of specialist International commercial managers and HSBC’s enviable global network, to give UK businesses the best chance of success.”

As large banks retrench from trade finance and with The World Bank now predicting a global recession, new data from online invoice auction platform MarketInvoice has revealed that British exporters and international companies are now turning to invoice auctioning to solve their short term funding problems.

MarketInvoice has now moved into international invoice auctions and trade finance and is opening a liaison office in Hong Kong. MarketInvoice HK Limited will now help foreign SMEs solve their short term finance problems, as international credit conditions for SMEs tighten.

Data from the site has revealed that SMEs that deal in exporting goods and services to the likes of Europe, America, the Middle East and Japan have turned to invoice auctioning, with the site now attracting global buyers from afar afield as Russia, Singapore and Switzerland.

In 2011 several Hong Kong companies approached MarketInvoice to use its service as they export into large UK supermarkets and retailers such as Morrisons, Arcadia, Amazon and Homebase.  One Hong Kong company has now auctioned over £800,000 in invoices to date and is forecast to auction between $4 – $5 million of invoices via MarketInvoice this year alone as UK retailers’ take up to 45 – 90 days to settle payments. Companies in Hong Kong have also found it difficult to obtain bank loans without pledging large collateral and personal guarantees. It was against this backdrop that MarketInvoice saw an opportunity to expand and help SMEs abroad with the working capital needs for their trade links into large UK corporates.

Anil Stocker, co-founder and director of MarketInvoice said: “Our core offering  is still very much for UK SMEs with UK customers, and with the latest official figures indicating we are now entering a new recession, we anticipate that UK SMEs will rely more heavily on invoice auctioning as banks tighten their lending criteria.

“However, we simply couldn’t ignore what our data was telling us. We regularly run auctions in pounds, euros and dollars but we were finding increasingly that foreign companies, particularly several in Hong Kong who export in to large UK retailers were turning to us for help. This shows that the problems that UK SMEs are currently facing are also being faced globally. Our customers are telling us that banks in Hong Kong in particular are asking for huge guarantees to secure loans, which a lot of SMEs just can’t give. It was for these reasons that we saw an opportunity to expand our offering and set up a Hong Kong office. With a very real fear of a global recession we know that international SMEs will have as much a tough year as UK SMEs.”