With increasing pressure for businesses to improve profitability, finding ways to reduce overheads and cut business expenses is a crucial but difficult process for many business owners across the UK. Often, businesses look to reduce the wage bill or cut down on unnecessary purchases, but looking into changing business gas and electric suppliers and finding cheaper rates can be equally important.
With the business gas and electric industry becoming an increasingly competitive landscape, opportunities are there for businesses to make real savings on their overheads. However, while purchasing cheaper air fresheners and cutting down on staff incentives can be easily identified on the company balance sheet, finding the right energy provider for your unique needs may seem like a daunting process.
Fortunately, changing business energy suppliers is not as difficult as it first appears.
Am I under contract?
While domestic electricity users can look to switch at any point, businesses operate under contracts that can vary in length from one to several years.
One misconception that many business owners are under, is that as long as they’re receiving bills from their supplier – they are under contract for their business gas and electricity. This may not be the case at all.
In fact, businesses whose contracts have lapsed may already be paying for more than they could for their business electricity and gas service.
Has my contract lapsed?
If you have not cancelled, renewed or renegotiated your contract with your business power supplier at the end of your initial contract period – you may be paying rollover rates currently.
A rollover contract will renew month-to-month, and is usually charged at a rate that is significantly higher than you could potentially pay.
If you are on a dual-service contract, you may be paying rollover rates for both your business electricity and gas – further increasing your overheads.
That’s why it is so important to check your business energy contract. If your current contract has expired, or is near expiring, you should be looking to switch business gas and electricity suppliers now.
If your current contract has not yet expired, you can look through the terms and conditions of the contract and see if there is a switching window, or enquire to find out what penalties you may be liable for should you look to switch business energy suppliers now.
How do contracts differ between suppliers?
There is zero difference between the gas and electricity that is supplied from supplier to supplier, and there is no need to worry about delays in your service should you switch from one contract to another.
All that changes is the way that you pay for it. This is why understanding your objectives, as well as how your business uses energy – should inform which business energy plan you end up choosing to switch to.
There are several different types of business energy contracts. Which will suit your business best will depend on a number of different factors.
Businesses can purchase energy through either fixed tariffs, or flexible tariff contracts which include time-of-use tariffs.
What is the difference between a fixed tariff and a flexible tariff?
A fixed tariff will apply a consistent rate for your energy throughout the length of your contract.
If you use a similar amount of energy from month-to-month, your bill will be roughly the same each month. This can be advantageous for businesses that want to accurately forecast their expenses months ahead of time, and is a safe approach for risk-adverse business owners that want to know what rate they will be billed at.
A flexible tariff, on the other hand, will fluctuate in price in line with trends in the energy market, allowing businesses to reap the rewards when the market is competitive. There is an inherent risk in this approach, as your bills may increase at a time when every penny counts.
Businesses that take this risk can end up saving significant amounts of money on their business gas and electricity, but your mileage may vary.
You’ll also need to consider whether approaching different suppliers for each of your business electricity and gas contracts, which may be cheaper than dual-fuel contracts – without the convenience of receiving one bill for all your business energy spending.
Businesses generally use considerably more energy than the average household – so being smart about your energy provider can save your business hundreds or even thousands of pounds per year.
The other option that certain businesses can take advantage of are time-of-use tariffs – which will bill you cheaper rates outside of peak hours. This is usually only beneficial for businesses that use considerable amounts of energy outside of peak hours – and very little during peak.
It is vitally important that you have a thorough understanding of how your business uses its energy before considering a time-of-use tariff. If you have not already, installing a smart meter can provide you with the oversight needed to make this decision, giving you a better idea of which hours your business uses its energy.
Exploring all of your options with a number of energy suppliers will give you a solid understanding of how much your business can expect to pay for electricity, and where it can expect to save.
Getting a quote
Once you’ve identified which type of contract will work best for your business, you should start approaching energy suppliers for quotes.
There are two key costs that you should be looking for when you receive a quote:
One is the price per kWh. This indicates how much you can expect to pay for your electricity and is calculated as pence per kilowatt-hour.
The other is the standing charge. This is the price that you pay to receive your business energy service, over and above any energy that you consume.
Both your business energy and gas contracts will include individual standing rates, so keep this in mind when comparing new quotes against the fees that you pay currently.
Compare these business gas and electricity rates against bills that you have received, both in the summer and winter months – to accurately gauge how much you can expect to pay. Depending on standing charges and your consumption, some contracts may be cheaper than others during some parts of the year – but more expensive overall.
What else impacts the quoted price for energy?
There are many factors at play when a supplier quotes your business for energy. The price that they quote you will depend on how they weight the following factors:
- Your location: energy is generally cheaper the closer you are to city centres due to the economies of scale and the cost of transport.
- What type of business you operate: businesses that operate outside of standard business hours will often receive a lower quote from suppliers – but this will vary from supplier to supplier.
- Your credit rating: if your business has a good credit rating, you’re more likely to receive a favourable quote. Some suppliers will weight this higher than others, contributing to cheaper quotes.
- The length of your contract: while not always the case, longer energy contracts are generally cheaper than shorter deals – particularly for fixed energy contracts.
- How much energy you use: calculating whether one quote is cheaper than another will involve calculating how much energy you use, and adding any standing fees to calculate average monthly bills. With standing fees and rates varying, this may end up deciding which supplier you choose to switch to.
How do I change my business energy supplier?
Once you’ve established which business energy contract that you would like to pursue, the process of switching is relatively pain-free.
You will have to get in touch with your current supplier and inform them of your intention to switch. Thereafter, your new business energy supplier will handle the details when it comes to switching – provided you have given the required notice, paid any outstanding bills, and the terms of your current contract allow you to switch providers.
You will confirm when the new supplier will begin, agree to contract terms, and the switching process will take place.
Do note that switching suppliers must be done by either the business owner, or an authorised person within the organisation. Additionally, cooling-off periods generally do not apply to businesses, so make sure that you are confident in your decision before agreeing to a new contract.
The process of transferring supply from one energy supplier to another usually takes between four and six weeks, so take this into account if you have a contract that is coming up for renewal.
How can I find the best energy supplier for my business?
Often, the best way to find the best rates for your business is to place your trust in an independent body with industry knowledge. At Smarter Business, our team of experts will source quotes from 27 trusted suppliers across the UK to find the right energy contract for your business.
We’ll consult with you to fully understand your business energy needs, and work with you to make the switching process as simple as possible.
With Smarter Business, the hard work is taken care of for you. We’ll find out the right contract for your specific needs.
If you’d like to find out more about how Smarter Business can help you switch business gas and electricity suppliers, get in touch with us today.
FREQUENTLY ASKED QUESTIONS
Who is the best business energy supplier?
There is no one size fits all solution when it comes to finding the best energy supplier in the UK. A small business in the centre of Manchester will pay a different tariff to a large enterprise outside of the city centre, and energy suppliers will provide wildly varying quotations based on a number of different factors.
The best approach to take is to source quotes from a number of different suppliers, taking into account your specific set of business needs – to determine a contract that will work for you.
Is switching energy suppliers worth it?
Absolutely. With the energy industry as competitive as it is, there is always a better deal to be had. No one company has a monopoly on energy prices in the UK, and businesses should be mindful that there is always a better deal out there. Capitalising on energy deals that work for your business will save you money in the long run.