Procurement · 3 July 2017

Micro business owners reveal the hidden energy costs crippling their cash flow

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Almost half of respondents had experienced a sudden and unexpected bill for a large upfront payment

Over half of UK micro company founders believe rising utility bills are “crippling” the future of their business, according to new research uncovering a number of worrying hidden energy costs.

The study, by challenger energy supplier Utilita ahead of Independent Retailer Month, suggested over seven in ten micro company owners had been caught out by unexpected terms and conditions in their supplier contracts, such as inflexible payment terms, contract extensions and high deposit rates.

Respondents used the survey to highlight potentially unfair treatment by mainstream energy providers. Almost half had been hit with a bill for a large upfront payment, while 42 per cent believed they had received a poor deal from the supplier due to the size of their business.

Meanwhile, 31 per cent believed they were on a high tariff because they were considered a credit risk. A fifth had been turned down completely by an energy supplier.

Most concerning was the reality of missing a payment. Some seven per cent had been completely cut off for failing to keep up with bills.

Commenting on the hidden energy costs faced by micro firms, Shaun Underwood, director of Utilita Business Energy, said: “It is clear that there are a significant and growing number of small businesses that appear to be treated unfairly and have very real concerns.

“Customers should not be asked to pay crippling upfront deposits when cash flow is a problem, should not be put onto discriminative contract rates and should not be punished or shunned by suppliers. We faced these very same issues in the early days so we really do understand.”

Responding to the study, Clare Bailey, an independent retail expert and high street campaigner, said micro firms were a crucial contributor to the economy and needed support to hold suppliers to account.

“A secure, affordable energy supply is vital for these businesses – it literally ‘keeps the lights on’ and the business operating,” she said.

“It is clear that too many of our small business owners feel they are getting a raw deal on prices and how they are treated. This needs to change.”

A recent Citizens’ Advice league table of energy suppliers exposed the providers giving entrepreneurs a poor deal. The rankings were topped by Extra Energy and Business Energy Solutions.

Commenting on the experiences of small businesses, Gillian Guy, Citizens Advice chief executive, explained that problematic energy providers cause “serious” setbacks for smaller firms.

“Firms rely on a smooth service from energy suppliers to grow and develop. Problems such as inaccurate bills or contract issues can undermine these efforts and waste small businesses’ precious time and money,” she said in a statement.

Meet the energy efficiency startup aiming to make British Gas obsolete

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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