Out-dated telephone systems are costing small businesses more than £1 billion annually, according to a new report.

The survey - not surprisingly carried out by an Internet telephony supplier - found that just one in eight small firms were making phone calls using the Internet. But those that did saw their telephone costs drop by around 23% and IT costs by 13%, according to Inclarity.

Nearly three-quarters of the managers quizzed for the report admitted they had little or no undertstanding of Voice over Internet Protocol.