I can’t afford to pay my business’ energy bills – what can I do?

For a business, energy bills can be one of the biggest outgoings. Energy is a required utility for most businesses, and depending on how much energy a business uses, price changes can have a costly effect on bills. As such, businesses struggling to keep their cash flow balanced could find themselves unable to repay them.

If this happens, you should consider all the options available to relieve the debts. These could include negotiating a more affordable rate with your supplier, taking advantage of government support, or exploring an insolvency procedure.

Energy contract renewals can be costly

While businesses should factor their current energy costs into their budget and forecasts, without the cap that domestic energy contracts benefit from, prices can skyrocket when a business’ contract ends. Consequently, they may not be able to afford the higher tariff.

What can happen if your business can’t pay its energy bills?

If your business can’t pay its energy or utility bills as and when they fall due, your supplier can take necessary action to recover what you owe them.

Non-payment could result in a County Court Judgement (CCJ) being filed against your company, which can damage your company’s credit rating if it’s not addressed. If you miss multiple payments, your supplier could even disconnect you, though the exact number of payments missed before disconnection could vary depending on the supplier.

It’s, therefore, essential that you speak to your supplier if you’re falling behind on your payments before the utilities are disconnected.

What can you do if you’re struggling to pay your energy bills?

Fortunately, help is available for businesses struggling to repay their energy bills, and in some cases, other debts.

Speak to your supplier

If you can’t afford to repay an energy bill, contact your energy supplier to discuss the matter.

You should make sure your bill is accurate and reflects your energy usage. If a mistake means your supplier is overcharging you, speaking to the relevant department could bring your bill down, and they might even refund the overcharged amount.

Explore a Business Energy Payment Plan

Your supplier may agree to a Business Energy Payment Plan wherein you repay your energy bills in smaller, more affordable amounts. You could also request more time to pay what you owe or payment breaks depending on your supplier. There’s a chance they’ll be more lenient if you contact them before you owe them outstanding bills than after you’re already in debt.

Shop around for a more suitable rate

While your current supplier might not offer a lower rate, others might, and if you’re able to, you can try shopping around for something more affordable. Comparing tariffs from several suppliers could help you find one at a rate that works for your business.

When shopping around, consider whether the quoted rate is fixed or variable. While the latter could initially be lower, as its name suggests, the price could go up and down depending on the cost per unit; potentially becoming unaffordable again.

Consider upgrade and energy efficiency grants

While more of a green energy incentive than a way to reduce bills, switching to a greener, more energy-efficient heating system could save businesses money if an inefficient system is contributing to rising bills.

The government currently offers the Boiler Upgrade Scheme, where small businesses can claim up to £6,000 towards installing a more energy-efficient heating system (such as a biomass boiler or a heating pump).

How we can help if your business can’t pay its energy bills

Sometimes, none of these options are suitable, and a more formal solution may be required. The business could have other debts, or your energy supplier might be unwilling to compromise. In this case, it’s important to speak to us as soon as possible.

Our team of licensed and regulated insolvency practitioners can provide free, confidential advice with no obligation and help you decide the best route forward for your business.

Contact our initial advice team for free, impartial, confidential advice with no obligation. We will assess your situation and help guide you towards the best solution to your business’ issues.

• Formal affordable repayment plan
  Formal repayment arrangements exist for limited companies. Company Voluntary Arrangements (CVAs) allow companies to repay their unsecured debts in instalments tailored to what the company can afford on a monthly basis. CVAs typically last five years, pausing creditor pressure and allowing the company to continue trading for the arrangement’s duration. Once the arrangement concludes, any remaining unsecured debt is written off.
  More on Company Voluntary Arrangements
• Restructure a company through administration
  If a company is in a situation that requires more substantial restructuring action, directors can explore administration. During this process, a licensed insolvency practitioner will act as an administrator while trying to return the company to a profitable state and make it more appealing to potential buyers. Administration is a temporary state wherein the company is protected from creditor pressure and legal action and is often followed by other insolvency processes.
  More on administration
• Company closure through liquidation
  If a business is insolvent and it can’t recover, a director can choose to voluntarily close the company by placing it into Creditors Voluntary Liquidation (CVL). When a company is liquidated, assets are realised and distributed amongst outstanding creditors in an orderly manner. Any outstanding unsecured liabilities not satisfied will then be discharged with the company’s liquidation, and the company will cease to exist. Directors can then start afresh.
  More on Creditors Voluntary Liquidation
• Company closure and restart
  A company can be sold via a pre-arranged sale of the business and its assets to a third party or a newly established company through a pre-pack administration. An Administrator manages the process to ensure fair value is achieved for the business and its assets. Pre-pack administration allows the directors to maintain control of the company and continue trading until the administrator is appointed, the sale completes, and the old insolvent company is closed. The process can minimise disruption to customers and often results in an enhanced return to creditors.
  
  Alternatively, the insolvent company can enter a pre-pack liquidation. Doing so closes the old, insolvent company and allows the business to continue in a newly formed one, free from its debts.
  If the core business has the potential to be profitable and has a good business model but finds itself hampered by debt and creditor pressure is becoming unmanageable, then a pre-pack liquidation could help the business continue. There are strict criteria around the use of pre-pack administration and liquidation, often only taking place if it’s deemed as being in the creditors’ best interests and if certain procedures are followed.

In summary

Having your business’ energy prices jump can be a nasty shock, and in the worst cases, it could even jeopardise the business’ future. If you’re concerned about being unable to repay your business’ energy bills as and when they fall due, you should seek help as soon as possible. Your energy supplier may offer a Business Energy Payment Plan to help you repay what you can in more affordable amounts. While more suited to futureproofing a business’ energy consumption than cutting bills, schemes can replace inefficient heating systems.

If more substantial recovery action is required or the company is struggling with additional debts, there are other options. Companies can explore formal insolvency recovery arrangements such as a Company Voluntary Arrangement (CVA). Limited companies can also explore administration or liquidation if there is no feasible option to alleviate the debts.

Whatever your situation, you should act fast to minimise any potential damage. Speak to our initial advice team for free, impartial, confidential advice with no obligation.

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