Within this business energy comparison guide, we’ll take a look at what the consequences might be for a business or homeowner if they simply cannot put together the money to pay those energy bills; consider some of the government support options available; and how you can make sure that those business gas and electricity bills stay as low as they can.
What Happens If You Can't Pay Your Energy Bills?
It seems as though energy costs are always on the up but somehow, they never seem to come back down. Sure, energy companies might be raking it in but for the everyday homeowner or business owner, there is one very real concern.
What happens if you can’t pay your energy bills?
That’s right, while gas and electricity bills continue to pile up on your doormat you need to find a way to pay them, or else. Or else, what?
What Happens If Businesses Can’t Pay Their Energy Bills?
The first question: what happens if you can’t pay?
You are probably thinking the worst. You might be imagining the energy supplier shutting off your heat and electricity, and whisking away your business income to cover just some of the money owed. Well, it isn’t going to get that bad straight away.
The first thing any business owner should do if they can’t pay their energy bills is to contact the energy supplier. If you have any reason to think you might not be able to make a payment, get in touch with your supplier straight away.
Every energy supplier will have a slightly different way of doing things, with a slightly different rate and contract available. You can compare quotes from different business energy suppliers with Business Energy Comparison to ensure you are getting the best deal.
That being said, every energy supplier is legally obliged to help you out thanks to energy regulator Ofgem. This might take the form of a payment plan or debt repayments payment breaks, to help your business get back on its feet. Alternatively, they might offer you more time to pay.
If you are unable to pay your energy bill, the money you owe to your energy supplier will build up and you will find yourself in a sudden deluge of energy debt.
Schemes And Grants Available To Help
With gas and electric bills seemingly always on the up, there are several government schemes and grants out there to help customers pay their monthly energy bills and avoid racking up energy debts.
Energy bill support is made available to domestic customers, however, businesses and non-domestic customers are equally eligible for support schemes and grants to help pay rising energy costs.
Energy bill relief scheme
The UK government energy bill relief scheme (EBRS) is open to businesses, charities, and public sector organisations who have been on a fixed-price contract since December 2021.
Most non-domestic customers are eligible, provided they are not energy suppliers nor making money in any way from the scheme. The purpose of the EBRS is simply to provide relief and aid in paying the rising cost of energy.
For businesses and other non-domestic energy users in Great Britain, this government-supported price has been set at:
- £211 per megawatt-hour (MWh) for electricity
- £75 per MWh for gas
These figures are valid for winter 2022/23 and are solely for residents of England, Ireland and Wales.
Hardship funds advice
Most of the larger energy supplier companies in the UK offer hardship funds. These are charitable trusts and funds, available to customers who are in debt, struggling to pay the energy company what they owe, and are most in need.
For the most part, hardship funds will be reserved for struggling households and domestic customers, and not so much for business energy bills. This is not resolute, however. Depending on how much energy you draw and how in debt you are, your energy company might be willing to consider a smaller business or micro business for hardship funding.
Warm home discount
The warm home discount is a chance to qualify for a £150 reduction in energy bills during winter 2022/23. The warm home discount is available to customers on a low income, who have the same electricity supplier and gas supplier.
Alright, so the term warm home discount rather implies that the energy company would be less inclined to extend this discount to those struggling to pay their business energy bills. While this is generally the case, keep in mind that many small businesses and micro-businesses work from home.
If the company is a registered business with just one, or two employees, struggling with paying bills and bringing in little income, speak to your energy supplier about the possibility of qualifying for a warm home discount. After all, if you work or run a business from home, your workplace is still your home, right?
What Can Energy Companies Do If You Fail To Pay Your Energy Bills?
In the first instance, no, they are not going to just cut off your power. Here in the United Kingdom, energy suppliers are legally obliged to offer help and support and try to find a way to help you make the payment. Of course, if you try to avoid payment, lie, or take advantage then yes, you can expect to lose power.
If a business is unable to pay the monthly energy bill, the energy supplier will attempt to formulate a reasonable payment plan. This might give the business more time to pay the money owed, or agree to take a lesser percentage for a set period so the struggling business can get back on its feet.
Alternatively, many energy companies will agree to debt repayment payment breaks. This will offer the business a break from paying so they can sort their finances out without the worry of more bills piling up.
If you fail to pay within 30 days without contacting your supplier, energy companies have the right to terminate your energy supply… and yes, you will still owe them money.
Pay what you can
If you are struggling to pay due to rising energy prices, most energy suppliers will appreciate a show of goodwill by simply paying what you can. No, they probably won’t let you off the hook, so to speak, but you will have a better chance of working out an affordable payment plan if you opt to pay something off the debt as soon as possible.
Even if your business is unable to pay the full cost right now, paying what you can is better than letting missed payments slip through. This will not stand you or your business in good stead with the energy company and it will ultimately lead to your own damaged credit rating.
Dealing with missed payments
When things go south, you can expect your energy supply company to seek out the money you owe them via a debt collection agency or a court warrant. Either way, they will ultimately seize back the money owed to them and it will negatively affect your credit rating and relationship with the supplier.
If you make no proactive move to work out a payment plan with your supplier, and they are forced to take out a court warrant, they are likely to temporarily sever your gas and electricity. In this instance, the cost of disconnection and possibly reconnection will be added to your existing energy bill.
When To Contact Your Energy Provider
As soon as you suspect you might not be able to pay your energy bills, contact your energy supplier. Energy suppliers are required to provide help and support, so provided you do not take advantage, they should be able to help you figure out a way to pay. The more upfront you are with your energy supplier, the more inclined they will be to go that extra mile to help you.
If you find that your current energy supplier is not giving the ideal debt advice, or is perhaps not offering the ideal help, a business might decide to switch energy suppliers. No, this will not cancel out any debt owed to the existing supplier, but the new supplier might offer a better rate, or be more willing to provide support.
With Business Energy Comparison, you can compare energy supply companies to ensure you are getting the best business electricity comparison, as well as the best business gas prices.
Why contact the supplier?
Well first off, you want to make sure that the energy costs on your bill are accurate. Hey, mistakes happen, and maybe this is just an admin error. Alternatively, it lets the supplier know that you are on the ball, and serious about finding a way to pay gas and electricity prices.
If your bill is accurate but out of your payment ability right now, then you should be able to work out a reasonable payment plan or period of reduced fees.
Extra Support For Energy Customers
Whether you are a business owner or a domestic energy customer, there are a few extra ways you might be able to shave a little off that electricity bill.
Prepayment meter
A prepayment meter is a type of energy meter which requires users to pay for the energy before using it. It seems a little old school, perhaps, but it prevents the build-up of energy debt since you need to have the money to get the energy. See how that works?
Installing a prepayment meter is an effective way to take control of your energy expense. It is generally a domestic solution, however small businesses (especially home-based businesses) might investigate a pre-payment meter as a solution.
Smart meter
Smart meters are slowly replacing all domestic meters across the UK and are legally required in new builds. Instead of waiting for a professional meter reading, an in-home display enables the individual to keep a track of their own energy expense and figure out the best way to be energy efficient.
The smart meter is working its way into homes but many small businesses and micro-businesses can also request an upgrade, which might be something to consider since certain smart meter energy tariffs are also cheaper.
Compare business gas and electricity quotes to find the most cost-effective business energy provider.
Direct Debit
Many domestic and business customers opt to pay energy bills via direct debit. This is often the cheapest way to pay for energy, so for any business struggling to pay it helps save money. It can be a little risky, however, if you are on the verge of being unable to pay your energy bill.
Think about it, if you are unable to pay and the direct debit automatically tries to deduct more money than you have, the payment is likely to fail and you may be charged. Alternatively, you might go overdrawn and end up paying overdraft charges on top of your energy cost.
In Conclusion
If a business is unable to pay energy costs, it can result in the business being forced to close its doors for good. However, there is no reason to assume things will come to that so long as you take every step available to properly manage your business finances.
First of all, speak to your supplier. You might get all the support and advice you need, with a little extra time to sort things out. Being upfront will prevent your supplier from switching off your power at the end of the month and your provider will also be able to alter your direct debit payments to match what you can afford to pay right now.
If your supplier is unable, or unwilling to help, contact your local citizens’ advice bureau or a national debt advice service to discuss funding and other business energy support options.
Frequently Asked Questions
Can electricity be cut off if the bill is not paid?
Ultimately, yes. If you fail to pay your electricity bill within 30 days without contacting your supplier, expect your electricity to be cut off.
What is friendly credit?
Friendly credit ensures your electricity and gas will be kept on during the night, at weekends, and on bank holidays, when you might not be able to top up a meter or get in contact with your energy supplier.
What is the energy price cap?
Protection for both domestic and business energy, the energy price cap ensures that a supplier cannot charge your business more than a set amount for electricity or gas.
The price cap is a sort of energy price guarantee set out by the government to prevent energy suppliers from charging above a set amount for energy usage.
Business Energy Comparison
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