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.

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 amount owed to small and medium-sized businesses in late payments has reached an all-time high of £33.6 billion since the first late payments survey in September 2007, according to Bacs, the organisation behind Direct Debit and Bacs Direct Credit.

As well as the overall figure being up on the same point 12 months ago when it stood at £30.4billion, the new data also reveals the average overdue amount outstanding to SMEs is  a record £39,000 and – worse still – they are having to wait even longer to be paid than last year.

In total half of all UK SMEs – 861,000 firms (across the country), are currently experiencing late payments from customers with business owners saying they are waiting on average 28 days more than the original payment terms to have their invoices settled. As the majority of businesses work to a 30-day payment term, many are now waiting at least two months to get paid.

The worst offenders for paying late, according to the research, are large companies which are behind 48 per cent of SME late payment debt, followed by public/private companies at 20 per cent. Government and not-for-profit are among the best payers, with just nine per cent of SMEs experiencing overdue payments from this quarter. The hardest hit sector is retail and distribution which is owed £16.6billion.

The most frequent excuse businesses hear is that the hold-up is due to internal systems – 55 per cent say they are being told their invoice is waiting for authorisation with the same number hearing that the bill is being processed by accounts. But the old chestnut of “the cheque’s in the post” still crops up fairly regularly, with 41 per cent of businesses giving this excuse.

While late payment is understandably putting a strain on cash flow, it is also increasing stress levels of the business owner as one in nine (11 per cent) report that waiting for important payments makes them ‘very worried’ and leads to constantly checking to see if they have been paid. A further 13 per cent are worried about the consequences that late payment will have on their business.

Mike Hutchinson, head of marketing at Bacs, said the issue of late payments is damaging to businesses which are relying on good cash flow to keep going through the fragile post-recession recovery period.

He says: “The issue of late payment is continuing to get worse for SMEs in the UK at a time when they need to be able to plan ahead for growth and ensure a strong cash flow, but instead they are hanging on for payments which could have a serious impact on their business if they are continually late.

“As our research shows this issue not only hits the business but owners are reporting how it puts them under great stress personally, which has further negative repercussions.

“We urge SMEs to look at how many of the payments they are waiting for can be automated to help them assert more control over their cash flow, and hopefully alleviate some of that stress on the business and its owner.”

Philip King, CEO of the Institute of Credit Management, adds: “This latest research reinforces how important it is that all companies, and more particularly SMEs, agree payment terms upfront and work to cultivate a prompt payment culture in all of their business dealings – one that will benefit everyone concerned.

“More than 1,000 companies have already shown their commitment to a more positive payment culture by signing up to the Prompt Payment Code, but these figures demonstrate that more companies need to change their payment practices in order to combat the detrimental effect of late payment on small business.”

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Whilst making sure the right insurance is in place is important for SMEs, as a specialist small business insurer, Hiscox understands that business owners want to focus on what they do best – running their business.

So it has created a Business Insurance Decision Tree in the form of an infographic to help steer small business owners through the different types of insurance available to them. The Decision Tree looks at variables such as whether you work from home or in an office, how many employees you have and what type of property you own, suggesting applicable cover which best suits an SME’s needs.

So whether it is office contents insurance for damage to property, employers’ liability for those with employees, professional indemnity insurance when offering advice, or public liability insurance, the Business Insurance Decision Tree can help clarify which insurance is suitable.

Hiscox SME underwriting manager, Deepak Soni, commented: “SMEs are experts in their area, but we don’t expect them to be experts in insurance, that’s what we are here for. No two businesses are the same, so the Business Insurance Decision Tree is a useful tool to help SMEs understand the risks they face and get the right cover in place.”

The Decision Tree is available on the Hiscox website at http://www.hiscox.co.uk/business-insurance/tips-and-information/which-business-insurance-is-right/

Hiscox insures more than 100,000 small businesses in the UK, offering a range of business products, visit now for further information.

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Over half (53 per cent) of British entrepreneurs put their business success down to their own innate talents which cannot be learnt or taught, according to new research* of 500 entrepreneurs. This compares to 13 per cent who believe that learnt skills or education have been the driver in launching their business idea.

A debate on the research findings by small business insurance provider Hiscox, attended by some of the country’s leading entrepreneurs and business experts reached the conclusion that entrepreneurship is more nature than nurture, although did also suggest that some key business skills can be learnt. The discussion also concluded that the current financial climate presents significant opportunities for aspiring entrepreneurs.

Hosted at the Royal Institution by science journalist Vivienne Parry, the Hiscox sponsored ‘nature or nurture’ debate saw Steve Ridgway, CEO of Virgin Atlantic Airways, Max McKeown, business author and strategic adviser, and Daniel T Jones, founder and Chairman of the Lean Enterprise Academy, argue what attributes they believe contribute to entrepreneurial success.

Entrepreneurship as an art

Max McKeown, supporting the nature side of the debate, said that entrepreneurship is an art, something that comes from a set of abilities that cannot be learnt. He also commented that entrepreneurs need innate qualities such as ambition in order to make the leap from having a great idea to actioning it: “Who’s more likely to succeed – someone with high skill and no ambition, or no skill and high ambition? If you’re an entrepreneur, you can hire as many skilled people for your business as you want.”

Hiscox’s research supports that view, with 23 per cent of entrepreneurs questioned stating they were not university educated and just 13 per cent believing business success is down to education or relevant experience. Respondents also listed innate attributes led by an analytical mind (81 per cent), followed by creativity (73 per cent), drive (66 per cent) and good communication skills (63 per cent) as key to business success.

Entrepreneurship as a science

But the research also acknowledged nurture as an influence: 88 per cent of entrepreneurs worked for another company before starting their own business and 30 per cent had studied business and management, showing that gaining competencies and experience within an established company can be an important part of business success. Professor Jones echoed the need for experience when debating for the side of nurture. He argued that entrepreneurs often fail at first, learning from their mistakes, and that some key entrepreneurial traits, for example problem solving, can be taught.

The lively discussion about the nature of entrepreneurship concluded with all panelists agreeing that post-recession is a time ripe for would-be entrepreneurs, citing successful companies Hyatt Hotels and MTV, which were born in similarly challenging economic times.

Professor Jones said that the recent downturn proved the current business model was broken: “Now is the time for entrepreneurs to really flourish”. Steve Ridgway commented that tough economic times always bring out business talent: “Entrepreneurs will go to hell and back if they believe in an idea.” Max McKeown echoed this thought, saying: “Entrepreneurs don’t believe the future is predictable – but they do believe that they can create the future themselves.”

Commenting on the debate, Alan Thomas, SME expert at Hiscox said: “One thing that’s clear is that it’s hard to package the profile of an entrepreneur into a ‘one size fits all’ format. While some people have all the required qualifications on paper, they may lack the innate abilities of a natural born risk taker or vice versa. It’s good to see that despite, or maybe because of, recent economic challenges, the spirit of entrepreneurship remains alive and well in this country.”

Hiscox insures more than 100,000 small businesses in the UK, offering a range of business products including public liability insurance and professional indemnity insurance.