Small businesses are the UK economy’s unsung heroes.

They employ nearly two thirds of all people and contribute more than half of private sector revenue, but many are finding it difficult to grow and scale up.

That points to fixing Britain’s productivity puzzle.

As the Financial Times recently reported many small businesses simple don’t have the time to think about these issues when they are focusing profitability, revenue growth or just survival. Given this, Xero is making the case for them.

As the UK’s most widely used online platform for small businesses with more than 300,000 customers, what we see are the practical issues that need to be resolved.

Barriers to growth break down into three broad areas: insufficient access to capital, minimal take up of relevant business technology, and an absence of key business skills.

First, access to capital. Our research shows that of the 50,000 businesses that fail each year due cash flow issues, some 65 per cent of these blame access to funding.

Quite often the working capital that small businesses need is tied up beyond their reach, with late paying customers.

Data from Small Business Insights, our monthly snapshot of the health of the UK small business economy, shows that on average, invoices with 30-day payment terms are paid in 39 days. FTSE 350 companies pay in 46 days on average, or more than two weeks late.

In addition to the immediate cash flow issue, late payments affect the SME’s financial profile, harming the firm’s credit score and making it harder to raise funds.

Now small businesses are obligated to meet all sorts of official requirements, we believe the time has come for large firms to be obligated to pay on time.

Second, we need to make better use of technology to help reduce the administrative burden on small businesses.

For instance, cloud computing helps small businesses to understand their cash flow, making it easier for business owners to know where they are with their finances.

This also makes it easier for banks and other lenders to access real time data on small businesses, helping small businesses raise funds.

To help the reduce the overall burden on small businesses, the Government should offset any additional legislation that impacts them by reductions elsewhere.

We would also like the Government to increase the VAT threshold to encourage small business growth and innovation.

Third, we need to help small businesses get the skills they need. Accountancy and bookkeeping are prime examples. Our research shows that 58 per cent of successful small businesses use financial software against 14% of businesses that fail.

To help instil these skills, we would like to see a public information campaign aimed at small businesses to encourage take up of business technology that can simplify business management.

We would also like the Government, with industry, to form a group dedicated to digital productivity to encourage small business best practice.

We want to help small businesses secure the funding they need, increase the uptake of relevant technology and gain essential business skills.

In doing so small businesses will be better equipped to become more productive – helping the firm, their employees and the entire UK economy.