In light of the Government’s new report which states that UK cyber crime costs the UK economy £27 billion a year, research by specialist small business insurer Hiscox reveals that nearly a quarter (22 per cent) of SMEs are concerned about e-risks and cyber crime.

Hiscox SME insurance expert, Alan Thomas, commented: “In light of these latest Government figures and the importance of data to businesses, it is essential that SMEs have strategies in place to mitigate online risks. Our research reveals businesses are now more concerned about cyber crime (22 per cent), such as hacker attacks and electronic ID theft, than having cash (eight per cent) stolen from their premises.”

“Our research also revealed that over a third (38 per cent) believed that their businesses are more likely to be a target of burglary since the start of the financial downturn which makes it all the more important to put in place robust security measures.”

Hiscox offers the following security tips to help SMEs to protect against online and offline risks:

Protect information with a need-to-know policy with employees. If storing information on a central file server, manage who has access to files. This can help prevent data loss whether accidental or deliberate

Running an enterprise is a full-time activity and if you do not have online technical expertise seek professional advice on security. This can both save time and ensure the security measures cover the business needs

Encrypt important information for extra security so that only authorised users will be able to access them

Using the internet and email to conduct business means that data loss becomes a risk. Develop a clear email policy and raise online security awareness and issues with employees

Back up your files and check your insurance cover so that you can get business up and running again quickly in the event of an incident

Items like laptops and computer monitors are common targets for thieves and the real cost of a stolen IT asset isn’t just the hardware, it’s the lost data and the lost productivity. Lock servers in a room and move laptops into a secure drawer at the end of a working day .

Invoice finance provider Bibby Financial Services has launched a guide for business owners and managers to help de-mystify the alternative business finance product, invoice finance.

The guide, entitled ‘Invoice Finance Made Simple’, aims to provide, in a clear format, all the information a business might need to understand how invoice finance works and the role it plays in helping maintain a regular flow of cash into a business. The easy-to-use booklet, which can be downloaded from the company’s website, contains a step-by-step guide of how to set up an invoice finance facility, information on the cost and who it is suitable for, plus a ‘frequently asked questions’ section and glossary.

Bibby Financial Services’ UK chief executive Edward Rimmer said: “There is a clear lack of knowledge of invoice finance amongst UK businesses and we are committed to doing all we can to educate business owners and managers on this flexible and secure source of funding that can grow as a business grows. Our own research shows that 85 per cent of business advisers and introducers rate their client’s current understanding of invoice finance as average, poor or very poor, so the industry clearly has a big job to do. We therefore hope this guide will be a useful tool for businesses exploring this form of finance.

“Despite the lack of knowledge among many firms, invoice finance is an increasingly popular finance solution – particularly as some traditional financial institutions are imposing stricter lending criteria and turning down funding requests. Already, more than 40,000 businesses across the UK use it to support them at various stages in their business life cycle and we want to communicate to the UK business community that our doors are very much open to any companies serious about building solid financial foundations.”

Bad things happen. It’s a fact of life. But with a little preparation, businesses can mitigate some of the impact.

There are some estimates that 80 per cent of businesses with no business continuity plan fold in the aftermath of a major disaster. And while this could be something along the lines of a national emergency such as a terrorist attack or health epidemic, it could just as easily be something closer to home, for example the incapacity of a key member of the business. Or it could be something as simple – yet damaging – as a strike leaving you out of contact with your customers.

Putting a plan in place can not only help you arrange procedures for dealing with emergencies; it also provides a step-by-step guide for individuals to follow when they may be finding it difficult to make decisions – giving them a route to follow will help them work through the crisis.

“By developing a simple plan, a business continuity plan, you can protect your business to ensure that no matter what disaster strikes you are prepared and “Business as usual” is the only thing your customers and suppliers see,” says Colin Ive from SME Continuity.

Your first step, according to the Contingency Planning and Disaster Recovery Guide, is to prepare a list of all the potentially serious events that could happen. This doesn’t necessarily mean listing all the disasters that could befall you, but looking at the issues that would affect your business. So instead of listing swine flu, ebola or any other illness, the list would include something along the lines of staff shortages or key person unavailability.

For each potential issue, you need to come up with a process to follow – the key people involved, any suppliers that need to be contacted, a list of contractors who may be able to support you and, vitally, any insurance policies you can claim on.

While business insurance won’t be able to completely prevent any effects of a disaster, it can help to mitigate any costs you may incur. Key Man Insurance can provide a cash injection into a business in the event of the untimely death or incapacity of a specified member of staff. The funds can be used to offset any loss of revenue caused by that person’s absence, or to recruit or train a new person in that position.
If your business is hit hard, and has to stop trading for a short period, Business Interruption insurance can help to tide you over. It’s a short term solution for a few weeks and is there specifically for if you have to stop trading due to factors outside your control – it doesn’t cover a downturn in trading conditions.

If the emergency is a bit closer to home, public liability insurance and employers’ liability insurance will protect you from claims for issues that arise on your premises. We live in a culture of litigation and if an injury or damage could be found to be your responsibility, then expect a hefty bill.

Research commissioned by AXA Insurance in association with the British Chambers of Commerce (BCC) reveals that over half a million people are uninsured in their workplace and only a third of businesses (34 per cent) understand their legal requirement to cover employees through employers’ liability insurance.

Alongside this, a worrying number of businesses are looking to reduce or cut out insurance cover altogether as the recession bites. In the last year, around 15 per cent have considered cutting back on their insurance while five per cent have already cut back their level of insurance cover. When it comes to making cuts to save money, reducing the level of insurance cover is almost as likely to be a target as the company’s tea and coffee (with 35 per cent and 39 per cent respectively).

However, AXA warns this is a dangerous false economy as 13 per cent of businesses have less than £1,000 disposable cash and 48 per cent have less than £10,000. This means that without proper insurance, companies would be left extremely vulnerable in the event of a claim – which around one in nine businesses are likely to make each year. Average claims costs for the three most common claims are around £49k for business interruption, £36k for fire and £3.5k for theft.

(Mis)understanding insurance

The research carried out among hundreds of British businesses across all sectors shows that ignorance is rife. Aside from nearly two thirds not understanding their legal obligations in relation to employers’ liability cover, only 11 per cent of employers understand that if a company van or other vehicle is made available to employees then the employer is legally obliged to insure it. Only 37 per cent understand completely what premises insurance is for while this figure drops to 26 per cent for equipment and contents and 30 per cent for public liability.

Business Interruption (BI) cover, which will pay out if you are unable to operate as normal or have to close your business due to an insurable event, was misunderstood with nearly a third (31 per cent) having no or little understanding and 15 per cent wrongly thinking that it is legally compulsory. 14 per cent wrongly think that BI is available if employees can’t get to work because of severe weather, and only 24 per cent realised that BI could cover you if you had to close your business because of a power cut . Seven per cent also wrongly believed that they’d be covered if they had to shut their business because employees got swine flu and six per cent if business was lost because of the recession.

Less than half of employers have read their insurance documentation (49 per cent) and only 23 per cent keep it in a secure filing system either on or off site. Four per cent of employers admitted to not having a clue on what they are actually covered for.

Employee viewpoint

Despite the fact that employers have gaps in their understanding, 89 per cent of employees were aware of insurance covering them for accidents at work, although over a third (36 per cent) had never been given any information about their employer’s insurance programme. AXA advocates that employers continue to prominently display their Employers’ Liability Certificate as well as making this available electronically.

Four per cent wrongly believed they’d be covered for discriminatory behaviour from colleagues and three per cent for accidents on the way to and from work.

Doug Barnett, head of customer risk management at AXA says: “These statistics should be a wake up call to all businesses and the insurance industry alike. With the economy as precariously positioned as it is at the moment, the last thing needed is more businesses needlessly going to the wall because they are not properly insured.

“We have taken the findings of this research very seriously and have produced materials that can be used by AXA to help get our message across to business owners and management that insurance is an absolutely vital component of any successful business.”

Companies with between 100 and 250 employees are 20 per cent more likely to have ageing debt than their smaller cousins

Smaller businesses are far more effective at managing risk, according to research released today from Close Invoice Finance

As part of its regular Small Business Finance barometer, Close Invoice Finance asked a series of questions on risk management to over 500 owners of SMEs of varying sizes. The survey found that three in five smaller SMEs (with between 1 and 50 employees) have less than 10 per cent of debt on their books for longer than 60 days (termed ‘ageing debt’).

In comparison, two in five larger SMEs (with between 100 and 249 employees) have this low level of ageing debt. The majority of larger SMEs admitted they hold ageing debt contributing between 11 per cent and 50 per cent of their debt book.

David Thomson, chief executive officer of Close Invoice Finance said: “This study proves that smaller SMEs have been more successful than their larger cousins at successfully managing exposure to the risk of bad debt. In such poor market conditions, it is imperative that factors such as cash flow supervision are managed closely.”

He continued: “Cash flow management tools can give companies complete peace of mind and provide protection against the impact of issues such as late payment and even bad debt.”