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Can’t pay business utility bills - Real Business Rescue

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We can help with serious company debts, HMRC and creditor pressure, VAT/PAYE/Tax arrears, cash flow problems and raising finance.

Reviewed: 6th May 2019

Businesses can be disconnected by energy suppliers relatively quickly if there’s no domestic use attached, sometimes after only a few missed payments, so it’s important to contact them as soon as you know you won’t be able to pay a bill.

Disconnection could prevent you from operating your business entirely, but would certainly compromise your ability to maintain good customer service. Utility bills include gas, electric, and water, and can be a little difficult to decipher at times, so let’s see what makes up these bills and how you might be able to save money.

Understanding business energy bills

Business energy bills consist of three main elements:

  • Standing charge: this is the daily rate you pay regardless of how much energy you use
  • Unit rate: expressed as a kilowatt-hour (kWh) - if you use a lot of energy in your business a low unit rate would be preferable
  • Contract end date: this is the date when your current contract ends – you’re likely to be charged if you exit the contract early

You may also see a Climate Change Levy (CCL) on your bill – this is charged to some businesses for every unit of energy they use that isn’t renewable energy.

Understanding your business water bill

The elements you might see on your business water bill depend on whether you have metered or unmetered water. A sewerage charge is also made. If you have a water meter in your business premises the bill will be based on your water usage, which can offer more control if your use isn’t high.

For non-metered businesses the charge is linked to the property’s rateable value, similar to domestic water supplies, so you pay a fixed amount for this supply regardless of the volume used.

What will happen if you don’t pay your energy and water bills?

Utility suppliers may be open to negotiating an instalment plan if you’re struggling to pay your bills. If you already have arrears you may get extra time to pay, or if your cash flow has been temporarily compromised for a particular reason, the utility provider may settle on reduced payments for a pre-determined period.

It’s important to get in touch with them quickly, however, and explain your business’ financial situation clearly. By being proactive and open in your communications it shows you’re taking payment seriously, and that your business is genuinely struggling.

If you don’t make an effort to get in touch you may be disconnected by your gas, electricity, or water supplier, with the charges for this and reconnection being added to your overall debt.

What to do if you’re struggling to pay business utility bills

Monitor and decrease your usage

By monitoring your gas and electricity usage, and water if you’re metered, you can see where it might be possible to cut down. Turning off computers overnight rather than leaving them on standby, for example, can save a considerable amount of energy over the course of a year.

Look for a better deal

Even though you may be locked into a fixed term contract with your utility provider, it’s a good idea to plan ahead for the end of its term. Checking prices and rates regularly will keep you abreast of the best options, and you may find that suppliers you hadn’t previously considered offer some attractive opening deals.

Payment plans

Hopefully, your utility provider will offer your business a payment plan so you can pay off any arrears, or prevent further financial decline. Moving to a fixed rate plan, for example, allows you to budget more effectively and along with other measures such as lowering energy usage, it may be all you need to improve cash flow.

Business rescue and restructure options when you can’t pay your bills

Being unable to pay your bills as they fall due is a sign of insolvency, so you may need to consider restructuring debt under a formal voluntary arrangement. Company Voluntary Arrangements, or CVAs, are only appropriate for some businesses but they do offer viable businesses the opportunity to trade out of financial difficulty.

A licensed insolvency practitioner (IP) negotiates on your behalf with your utility suppliers, plus other creditors if necessary, with a view to setting up affordable repayments towards your debts.

Company administration is another potential option when you can’t pay your utility or other bills. For more information on how to manage late or non-payment of gas, electric, and water bills, call one of our licensed insolvency practitioners at Real Business Rescue.

We are business rescue experts - we will clearly explain all your options and help you decide on the best way forward. Working from a network of offices around the country, we’re able to offer free same-day consultations to quickly establish your situation.

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