How to take the uncertainty out of your business energy bills

By Dan Matthews on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Running a successful small business means ensuring you make more money than you spend, but this isn’t always an easy balance to get right. Seasonal changes in revenue and late payments can dwindle money coming in, while unexpected bills put a strain on money going out.

According to recent research by Xero and PayPal, 28% of small businesses owners describe cashflow management as a challenge, while almost the same number admit struggling to pay suppliers on time, creating a vicious circle of money arriving late.

But while an unexpected bill from your supply chain can cause sleepless nights, so too can costs you know are coming, such as your business energy bills, which are notoriously difficult to predict accurately and are too often underestimated.

This is not a problem to sniff at: for the smallest businesses, those with no employees, of which there are millions within GB, gas and electricity costs are among the biggest sources of expenditure after tax.

A question mark over costs

Figures from Smarter Business show the average small business consumes between 15,000 and 30,000 kilowatt hours (kWh) of electricity each year, equating to bills of between £1,900 and £2,900. For gas, the figure is 25,000kWh annually and a bill of nearly £1,000.

While it’s possible to shop around for the best deals, it’s not so easy to predict how much energy your business consumes and, as a result, how much you will have to fork out. This is particularly true for growing businesses for which bills increase in line with expanded operations.

Leaving such a large expense to chance could put a major question mark over your business’ ability to turn a profit, or could weigh on your available cash just as revenue drops because of seasonal factors, for example.

Research from Smart Energy GB underlines why this could be a problem for small firms. It shows that microbusinesses have, on average, just nine weeks of cash in reserve before they fall into debt problems.

In spite of this, more than half of owners responding to the survey (56 per cent) admitted they could get a better handle on expenditure if they had accurate information about business energy use.

A smart solution

A growing number of businesses in Great Britain are turning to smart meters to remove the guesswork from the bill paying cycle. Since the rollout of smart meters began, almost 25 million smart and advanced meters have been installed in homes and businesses across the Britain.

If your supplier offers an in-home display, they are a useful tool enabling your business to monitor and manage its energy consumption by showing you how much energy you use in pounds & pence in near-real time.

Instead of allocating space in your day for a meter reader to visit, smart meter readings are fed to your supplier automatically, stripping out the need for estimates and eliminating uncertainty over how much you must pay.

Not only this, but smart meter-enabled businesses may have the chance to act on the information at their fingertips, by spotting areas of high usage and making changes.

Replacing end-of-life technology – fridges, printers and desktop computers, for example – with smarter systems and combining this with a strategic approach to their use, could help reduce bills further. It’s a potential double-win for your cashflow.

Ask the experts

In a statement on its website, the Federation of Small Businesses (FSB) endorses the move: “The advantage of having a display feature in your business is getting [near] real-time updates.

“You’ll be aware of exactly how much energy you’re using and when you’re using it. It’s a great way to improve energy efficiency, in the long run you might be able to save some money.

“Smart meters are also the first step to a smarter market in general, enabling you to switch suppliers…quickly and easily, and creating opportunities for new tariffs and services that are tailored to how and when your business uses energy.”

Cashflow is a perennial challenge for even the most successful businesses, with many falling foul of money trouble each year. By installing a smart meter and acting on the information you receive, your business could learn more about one of its major expenditures, potentially eliminating one source of cashflow headaches.

For more information about the benefits of installing a smart meter in your workplace, visit the Smart Energy GB website at smartenergyGB.org

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