Whether you are a new start-up, fledgling smaller firm or large multi-national, all businesses need to look after their energy bills. Electricity, gas and water are overhead costs, and it is critical to compare business energy rates get the best deal possible. Focusing on this will help your company to reduce the amount you spend on energy and have more resources to grow with. From independent coffee shops to high street cafes and large organisations in any sector, this is true.
Compare business energy quotes
But how do you go about handling this key area in the right way? Many businesses now will look to compare the best deals for corporate energy before signing on the dotted line. Doing this means that you get access to the best tariffs and best rates, rather than simply accepting the first deal you come across. Sky-high energy bills can really affect your profits and operating costs. For this reason, it is worth shopping around to hold onto more of your businesses money while still being able to keep the lights on!
Don't fall into the common business energy trap
Shopping around for the best deal sounds like common sense - so why do some companies still not do it? The answer lies in human nature and habit. Just like domestic energy customers, many organisations stick with the same energy supplier for years on end. This is often in the false belief that there will not be a better deal out there or that comparing energy suppliers is too much hassle.
The problem with this approach is that it usually ends up with businesses paying far more than they should for their gas or electric. Sticking with the same supplier without thinking often sees companies put onto higher tariffs and lose out on cheaper ones on the market. Over time, this naturally sees a business spend much more on energy than they needed too. This is money that could have been used to hire more staff, buy more stock, update machinery, market the business or move to new premises.
How are business energy rates calculated?
You may think that business energy rates are fairly standard across organisations but they actually rely on a number of variables. This means that what you pay in terms of rates will differ across businesses. This is often more pronounced than the variation in rates that domestic users will notice.
But what are the most common variables that affect business energy tariffs?- Credit rating - Size of business - Business postcode - Type of business (i.e. limited company or sole trader) - Which sector your business is in - How much energy your company consumes per annum
As you can see there are a number of factors which affect how much you pay for commercial energy. But how can you ensure you do not get charged too much? As we have noted already, comparing energy suppliers is the easiest way.
Pay attention to business energy deals
One of the key things to do here is keep on top of your corporate energy contracts. This is naturally sensible when coming to the end of one but is also crucial to do as you go along. The first priority in this regard is making sure you are on the right sort of contract to begin with.
But what are the different type of contracts you could sign-up for?
- Rollover contract which is renewed automatically. This sort of contract will run until you cancel it but does not always give you the best rates. This is because your energy supplier may change you to a more expensive tariff when rolling the contract over.
- Fixed-term contract which some businesses prefer as it locks you into a certain price for a set period. Of course, the main drawback is that you cannot switch to a cheaper deal if you find one.
- Deemed rates which are mainly for companies who have just moved premises. This sort of tariff is often costly.
It is very important to look at what type of energy deal suits your business best and find one that offers this.
Green energy can save you money
One other fabulous idea when it comes to reducing corporate energy spend is operating in as green a way as you can. This will also help give your brand reputation a boost as consumers now look to spend money with greener businesses. In light of this, you should know about the Climate Change Levy. This levy is designed to give companies an incentive to operate in a more environmentally friendly way. The levy is a tax applied to all businesses in the public sector, commercial, industrial and agricultural industries. If you operate in these sectors, you could get a reduction on your main business energy rates if you can prove your green credentials.
Energy market investigation by CMA
You may think that the work of making your energy bills less expensive is down to you. This is largely true - up to a certain point.
There is however a growing appetite for reform in the energy market and this is something the Competition & Markets Authority have been taking note of. March 2016 saw it announce its provisional findings after an investigation into the energy market. The CMA estimated that microbusiness clients of the top 6 energy suppliers were stumping up £180 million more than they could have in a market which functioned more effectively.
It found that so-called 'acquisition tariffs' attracted the best prices. These tariffs are open to you if you choose to switch suppliers but also promise to fix your supply for 1 year or longer. If this is suitable for your own business, it is a good way of getting better rates and spending less on energy.
Don't neglect your business energy
Anyone who is setting up or running their own business should pay close attention to their business energy rates. It really is worth spending some time comparing deals, looking at contracts and shopping around suppliers. This will ensure you do not overspend on corporate energy and have more money to invest into your business.