Switching energy supplier is one of the main ways you can save money on your household bills – but it isn’t just domestic customers that can reap the benefits of moving provider.
Small businesses are going through the toughest times at the moment thanks to the ongoing pandemic, meaning 80 per cent have had to cut back on their spending, according to data from Bionic, a site that helps small businesses save money on their bills.
It found that 53 per cent of SMEs have cancelled or delayed direct debits to their business utility suppliers in recent times whilst another 52 per cent have also delayed payments to their business suppliers.
A massive 80 per cent have also had to cut back on their spending during the coronavirus crisis.
Switching energy provider is a good move for businesses as well as domestic customers
However, for small businesses that have never compared business energy deals and switched before, they are likely to be on more expensive ‘out of contract rates’, which can be twice as much as contracted rates.
Government estimates suggest that reducing energy consumption by just one per cent would mean that big businesses could save over £250million on their annual energy bills.
This is Money, with the help of Bionic, has answered some of the top questions small businesses face about their bills and we provide top tips on how to save money.
Is switching energy supplier if you’re a business different from when you’re a domestic customer?
There are some differences to switching provider if you’re a business rather than a domestic customer which we have outlined below.
You will get cheaper rates: Business energy users benefit from cheaper rates than domestic users, largely because of the way contracts are set up and the fact that businesses use more gas and electricity. But that doesn’t necessarily mean you’d save money with a commercial deal.
Once you factor in the 20 per cent VAT rate (compared to 5 per cent for household energy) and other charges, like the Climate Change Levy (CCL) you could end up paying more than you would with your fixed rate domestic tariff.
Prioritised service: Due to the higher energy usage, business energy customers tend to get prioritised service/support.
Long-term fixed rates: While most domestic deals run for a year, with an option to leave early if you want – often subject to an early exit fee – commercial rates can be locked in for two, three or four years.
This means you can avoid the inevitable annual price rises for a number of years, and tying in to a longer term deal means you might also be able to negotiate even cheaper rates.
Although commercial deals have this added security, be aware there’s no cooling off period, so it makes sense to arrange your deal to ensure it meets your exact needs before you sign up.
A longer switching window: In theory, you can switch from a fixed rate domestic deal any time you want. But unless there are 49 days or less until your contract’s end date, you’ll most likely be charged an early exit fee, which can be anything up to £60 per fuel.
Business energy deals, on the other hand, tend to offer a switching window of up to six months, during which time you can compare deals and arrange for the switch to take place as soon as your current one ends.
Fuel flexibility: Business gas and electricity is sold separately – even if you have the same supplier for both, this won’t come as a dual fuel deal and you will have two separate contracts, possibly with two separate renewal dates to remember.
Small business owner has switched multiple suppliers to save money
Alison is a small business owner who has switched energy supplier recently
Alison Savage, a Holistic Therapist from Mansfield, who owns her own business said she has changed multiple suppliers to save money after she had to close down her firm during lockdown.
Alison said: ‘I work from home and was not allowed to re-open until mid-July so we were shut for four months.’
As she was unable to work, Alison needed to save money where she could and one of the first things she did was changing supplier for both her energy and telephone bills, through Bionic.
Bionic’s tech-enabled experts help SME’s find the right deals on their business energy, connectivity, insurance & finance.
‘All energy prices seem to have gone up. When I was allowed back at work, I wanted to change as I have to have the heating on all the time.’
Alison said she wanted a green tariff that, even though it wasn’t the cheapest, it was good value for being environmentally friendly.
Now she may have to shut her firm again for the foreseeable future, she is glad that she at least is on a better tariff on before, saving her money.
Do I have to keep paying energy even though my business has closed?
Even if your business premises is empty, you will still be billed by your energy supplier unless you’re on a no-standing charge tariff.
However, the overall cost of your bills should be cheaper, provided you’re definitely no longer using gas and electricity.
If your workplace is lying empty, make sure all equipment that can be is turned off at the mains and switch off any heating or lighting timers.
It might also be worth considering switching to a no-standing charge energy tariff, but bear in mind that unit costs are usually more expensive on these deals, so you could end up paying more for your energy once you go back to work.
You could also save by switching to a business energy deal.
Ten tips to help businesses save on their bills
1) Use price comparison sites: Times are hard at the moment with firms having to turn to whatever support they can to keep afloat. Using price comparison sites is the best way to find a deal that works for you.
2) Carry out an energy audit: Any business that employs at least 250 people, or have an annual turnover of above around £40million and a balance sheet above around £34million, must carry out an energy audit every four years, and try to identify ways it can cut usage.
But even if you run a small business, it could be worth undergoing a professional energy audit to get an accurate breakdown of when and where you’re using energy to work out where you can cut down and save energy and money.
3) Know how to use your heating system: Make sure you know exactly how your heating system works, and how you can adjust the timing and temperature settings to make sure you’re not needlessly heating your business premises when no-one is there. Also, look out for any energy-saving settings and put them to good use.
Making drinks in rounds when at work is just one way to save money on your energy bills
4) Make drinks in rounds: Encourage employees to make hot drinks in rounds, so instead of boiling the kettle multiple times for each drink, it’s just filled and boiled once for the whole round.
5) Upgrade energy efficient appliances: Replace and upgrade existing appliances with energy efficient appliances, preferably ones that carry the EU EnergyStar standard, or equivalent.
6) Switch everything off at the end of the day: Make it company policy to turn off all computer and communal equipment at the end of each day.
If a computer and monitor is left on 24 hours a day will cost around £45 a year – switching them off and enabling standby features could reduce this to less than £10 a year.
7) Fit energy-efficient lighting: Energy efficient light bulbs, such as compact fluorescent lights (CFLs), light emitting diodes (LEDs), or slim line tube lights not only reduce energy consumption, but also last up to ten times longer to cut down on disposal and replacement costs.
Simply installing energy efficient lights can see instant savings of up to 75 per cent. For more natural and brighter light, install tri-phosphor coated tubes.
8) Insulate your windows: Even if you have double glazing, it could be worth fitting a reflective film to the windows to help regulate heat and reduce glare. This is a good way to help cut energy usage in summer when workstations situated by windows get hot and staff are inclined to crank up the air conditioning or use desk fans.
9) Fit thermostatic radiator valves (TRVs): Thermostatic radiator valves sense the air temperature around them and then control heat by regulating the flow of water through the radiator they are fitted to.
Turning a TRV to a lower setting results in the room being controlled at a lower temperature, and saves energy. This is useful where there are natural temperature variations as it stops heat being delivered to the warmer areas.
10) Regularly maintain your system: It’s important to stick to a regular maintenance schedule to both ensure your entire heating system is working efficiently and spot any potential problems before they become fully-fledged disasters.
A well-maintained system can save you as much as 10 per cent on your bills.
Could you cut your energy bills… or help the planet and go green?
Millions of people could be needlessly overpaying for their energy as they fail to switch to providers who offer cheaper deal.
They may also be missing out on the opportunity to help the planet and fight climate change, by switching to green deals that offer electricity from renewable sources and more environmentally-friendly gas.
With our partner, Compare the Market, you can compare energy tariffs and exclusive deals.
Why not find out if you could save hundreds of pounds a year on your energy or go green?