The Financial Mail reported over the weekend that British Gas is considering rolling out prepayment energy meters to small firms that have poor credit records. Apparently, British Gas is currently running this as a trial and expects to install more meters within a year.
In our fragile economic climate, the last things that small businesses need are higher costs and less flexibility to switch supplier and secure the most competitive rates.
Energy can make up a significant percentage of a business’s operating costs and for many businesses having to pay upfront for all their energy could not only stifle their cash flow, but hinder their growth too.
The meters which are being installed are smart meters, which can switch between being a normal credit meter and a prepayment meter. It is unclear whether customers would be able to revert to a normal meter and tariff should they increase their credit rating. It’s also unclear what impact this would have if the business wanted to switch to a new supplier later on.
Implementing prepayment meters would be a regressive move, and could potentially punish small businesses in the long-term. While I recognise British Gas’s concerns regarding unpaid bills, surely they could deliver a short-term solution to remedy non-payment issues without inflicting long-term pain to businesses? Perhaps by allowing customers to switch between different payment methods?
The key thing for small businesses is to shop around, as all of the ‘Big Six’ have different criteria for taking on business customers and over the last few years the business energy industry has been gradually progressing towards a more competitive market.
The latest idea from Chris Huhne in his efforts to redistribute government revenue is to increase environmental levies and in turn, to potentially cut Income Tax for thousands of people, or reduce National Insurance payments.
This strategy of ‘robbing Peter to pay Paul’ ticks all the boxes in the bid to meet environmental targets, but will increase fuel tax which will affect motorists and travellers directly in the pocket. Indirectly, this reinforces the message to reduce air travel and to embrace public transport, which has obvious environmental benefits, however, for many business travellers and commuters, this continues to fan the flames of the ‘use less, pay less’ battle, which many businesses face on a daily basis.
There is always the option to compare flight and travel costs, and to shop around at the pump for the best fuel prices in the area, but there will be no escaping potential prices rises of up to 30p per litre if the proposals go ahead.
To survive this period of cost reduction whilst increasing productivity and overall revenue, it seems that businesses need to mirror the government’s moves to create their own financial balance. One way to do this is to fix prices where possible - if someone gave you the option to fix fuel prices at the pump two years ago, knowing what we know now, everyone would have jumped at the chance. However now another fuel rise is approaching and we have no choice but to accept it. So you pay more for travel, but where can you offset these extra costs and fix prices to save money? Business energy.
Looking at you business energy contract is one way to save money, and by fixing your rates now, you will protect yourself against inevitable price rises over the next couple of years. Contract lengths can vary from 1, 2, 3 or even 4 years, so there is an opportunity for every business to fix their prices for a period that suits them. The best way to do this is to use an energy broker such as uSwitch for Business. The broker team will advise you of the various contracts and rates available to suit your business energy needs from a wide range of suppliers, and will ensure that you are getting the best deal for your business. The advice is free and they can set up your new energy contract with the supplier of your choice. It is an easy way to save money, fix your prices and have peace of mind that you are not paying over the odds for an everyday product.
Getting bespoke quotes to suit your business needs, rather than off the shelf products is an excellent way to ensure you are only paying for what you need. uSwitch for Business can also help you find the best solutions for your communications, insurance and help with business factoring when it comes to invoicing.
Other approaches to creating a financial balance are: to compare and save on day-to-day business products such as stationery, monitors or software; speak to your product suppliers and ensure they are still giving you the most cost-effective solutions; revisit your marketing strategies – are they giving you a good return on your investment?
By reviewing your financial balance, you will not only potentially find revenue to reinvest, but you will be better prepared for any further impact from government balancing acts, of which I am sure there will be more!
We’’ve all heard or read the news recently about the ‘Great Energy Rip-off’ and the pressure on Ofgem, the energy industry regulators, to investigate energy prices from the suppliers. In addition to this, energy minister Chris Huhne has been known to talk of his ambition for us to use less energy, to reduce bills as prices rise.
Fine for those who openly ‘waste’ energy, pay higher bills as a result and can easily save by turning off 3 out of the 5 televisions in the house when no one is watching them, but what about small businesses who need to use large amounts of energy, either in manufacturing or for services such as hairdressing etc.? The idea of cutting down their bills by using less energy puts them in a no win situation. Sure, all businesses can assess their energy usage and become more efficient, but only to a point, after which they rely on getting a good deal for their energy usage without it impacting on their daily business output or performance.
With threats of energy prices rising as the government plans to cut carbon emissions, the best thing to do is to find the best deal at the time to suit your business energy needs.
The good news is that although the business energy market is not as closely regulated in the same way as the domestic industry, business suppliers purchase their energy differently, and can track wholesale rates more closely. This is why price changes are more frequent, so when you are in your renewal period looking to secure a new contract and you find a good deal, secure it. But how do you know you are getting the best deal to suit your business energy needs?
By sending your bill to uSwitch for Business, and giving us a few details about your company, our business advisors can understand your energy usage and quote you the rates from multiple energy suppliers, including household names such as British Gas, ScottishPower and npower. That way you can be sure you are getting the best deal available at that time to suit your individual energy usage, and to give you the peace of mind that you can continue to use the energy you need to use without worrying about paying over the odds, leaving the government to wrangle over the price wars.
- Government energy plans unveiled by Chris Huhne (telegraph.co.uk)
- Chris Huhne’s efficiency drive to turn wasteful houses green (guardian.co.uk)
By Ellen de Vries
If you run a business, you may have a well-trained eye for recognising where to cut costs without upsetting the balance too much. But our research shows that cutting costs can sometimes go too far, particularly when it comes to turning off the taps on free tea and coffee.
In the last year, many businesses have been forced to cut hours, make redundancies and scrap bonuses. The next step is to start thinking about how to cut costs even further; perhaps by turning the heating down a notch, turning monitors off at night, or looking into more economical suppliers. In fact, many business owners don’t know that one of the most economical ways to cut costs is to reassess their contracts with their energy suppliers.
Unfortunately, last year a spate of companies followed an example set by a budget airline – putting a stop to offering free tea and coffee to staff. According to our research, a surprising 25% of UK companies have cut back on free refreshments over the last year.
“If the company is mean about tea and coffee, what else are they mean about?”
Scrimping on teas and coffees may seem like a small step, but this can have a surprisingly large impact on the overall functioning of the business. One third (32%) of workers say that small perks boost company morale. To have the tea taken away also appears to be a sure way to put a downer on the office atmosphere, and start rumours about the company’s bleak financial future. So when you’re thinking of cutting costs, think twice about how much you’re actually affecting the company culture; removing even the tiniest perks can have a profound effect, and financial consequences.
James Constant, small business expert at uSwitchforbusiness.com, says: “Given the economic climate it makes sense to cut costs. However, it’s also vital that companies send out the right message to loyal staff…there may be a far greater price to be paid in staff morale.”
Hurrah! The summer holiday period is finally here…a chance to take some time away from the office, relax and recharge the batteries.
I booked my summer holiday to Spain the other day, and really noticed this year how much the prices have risen and started to think more and more about what I was getting for my money.
Of course, those of us who go on traditional beach holidays all expect the basics – sun, sea and sand; much like the way we expect a blue flame and a flicker of light when we switch on our gas or electricity. However, you wouldn’t book a holiday without checking out what you are actually getting for your money would you? For instance, what is the hotel like? How good is the service? The food? Are there any hidden extras that you may be expected to pay for ?
Turning this analogy to energy made me think about how choosing your energy supplier comes with similar considerations: what is the customer service like? Can I manage my account online? Can I get a free smart meter installed for accurate billing? Whilst price is the main driver for many people when choosing their energy supplier, the secondary drivers can often be just as important. And just like your holiday, sometimes it pays to spend a little bit more to get the extra benefits available.
But this doesn’t just apply to your domestic energy; the same considerations apply to business energy customers, where fixed price contracts make it even more important to ensure you are happy with the whole package you are signing up for.
For many companies, partnerships and even sole traders, the summer months can be a boost for business, for others, it can be a slower period that brings the opportunity for some housekeeping. And whilst no-one wants to think about the weather changing too soon, one of the best ways to prepare for the change in seasons is to re-assess your business energy bills. It is a time when demand is higher, and bills inevitably rise, and is also an ideal time to check when your energy contract is up for renewal - don’t go away and risk missing being rolled into a higher priced contract.
So why not take some time before you jet off to foreign shores, to dig out your energy bill, ensure you are getting the best rates to suit your business needs, and you might even save a tidy sum that you can put towards those little holiday luxuries… sangria anyone?
- The draft Energy Bill: a five-minute summary
- 60% increase in business energy costs as average turnover falls by 6%
- Business week in brief: 11th May 2012
- Ed Miliband and the Queen talk energy
- Interview with Steve Fitzsimons of new business energy supplier, Hudson Energy
- Business week in brief: 4th May 2012
- The see saw of corporate profit
- Business week in brief: 27th April 2012
- EDF Energy’s Business Customer Commitments: four key pledges
- Businesses buck the trend when it comes to smaller energy suppliers