It’s no secret that businesses – in particular SMEs - have been struggling to cope with rising energy bills for some time.
Significantly increasing energy costs mean that many businesses are finding it hard to cope with sky-high energy costs – and with government support schemes ending, plus a 6.4% energy price cap rise from April 2025, it looks like the crisis will continue to rumble on for some time yet.
So, what’s the solution? If your company is struggling financially due to rising utility bills, read on to discover our expert advice on protecting your company from insolvency and how specialist advice from local insolvency practitioners can help ensure your business lives to fight another day…
9 ways to protect your company from rising utility costs
1. Know the warning signs
Firstly, if your company is nearing the point of insolvency, you need to act fast if you’re going to recover your position and save your business. It’s vital that you keep an eye out for the warning signs of insolvency and act as quickly as you can.
Key things to look out for include cash flow problems, defaulting on bills, struggling to pay staff wages, high interest payments on loans or facilities, and falling margins. If you notice any of these signs, it’s important to seek advice from a licensed insolvency practitioner as soon as possible.
2. Take a close look at your cash flow
Another important way to protect your company from insolvency is by taking a close look at what’s going on with your cash flow so you can identify pressure points, make realistic projections, and implement improvements.
For example, are your invoicing procedures up to date? Are you owed any payments that you could chase up? By closely reviewing your cash flow, you can identify ways to make improvements and hopefully give your cash flow the boost it needs.
3. Put together a plan
Now you know what’s going on with your cash flow, it’s time to put together a business rescue plan to steer your business back to profitability.
When you reach out to a local insolvency practitioners, they will assess the future of your company and help you put together a plan that takes advantage of insolvency laws to protect your business and give you a chance to turn things around.
Your business rescue plan should accurately reflect the standing of the company and cover key issues such as the basic operating budget, the minimum financing needed, cost cutting strategies, and ultimately how to keep your business afloat.
4. Liaise with your creditors
If your business is struggling financially, it can be tempting to bury your head in the sand and hope that everything gets better on its own. However, it’s always best to face things head on if you want to protect your company.
It’s daunting to liaise with your creditors, but the fact is that the majority would rather give you more time to pay rather than take legal action against you, so it’s always worth trying to negotiate an informal repayment plan.
Such arrangements aren’t legally binding, and your creditor could pull out at any time - however, if you stick to the terms of the plan and make payments on time, it could be an effective way to deal with your debts and protect your business for the future.
5. Arrange a Time to Pay
If one of the creditors you are struggling to pay is HMRC and you aren’t able to pay your taxes, it’s worth contacting HMRC to see if they will consider offering you a time to pay arrangement.
A time to pay arrangement enables businesses to pay off their tax liabilities over an agreed period, taking the pressure off and buying you extra time to turn things around.
However, not all businesses are eligible: you’ll need to have a viable business model, no previous history of failing to make payments, a steady cash flow, and a solid business proposal along with clear evidence that your business is viable and that you are able to pay off your debts.
Find out more about how to apply for a time to pay arrangement in this blog.
6. Get your finances in order
Once you’ve spoken to your creditors, it’s time to get your finances in order. Start by carefully reviewing your accounts to see who owes you what and review your balance sheets to see what efficiencies can be made.
When you know what’s going on with your finances and how much money you need to stay afloat, you can keep a close eye on your cash flow whilst seeking alternative financing options to boost working capital.
Some possible solutions include factoring and invoice discounting, stock and asset refinance, or even taking out a director’s loan. For more ideas on ways to raise money, don’t miss this blog.
7. Reduce operational costs
As well as raising additional finance, if you’re struggling to keep your head above water, it’s a good idea to try and reduce operational costs as much as you can so you can nip any unnecessary spending in the bud.
Start by analysing your fixed costs, such as rent, before looking at other ways to reduce costs such as office space, outsourced services, and staff perks. Basically, you need to cut everything back as much as possible, so you are paying as little as possible.
8. Consider a company voluntary arrangement
If your company is facing more serious financial problems, a company voluntary arrangement (CVA) enables you to ring-fence your business and give you the breathing space you need to find a solution.
A CVA is a formal arrangement between a company and its creditors which highlights that, although you can’t currently pay your debts, you will be able to in the future. It gives you the chance to trade out of debt by paying towards your business debts for an agreed period. Once that period is completed, your remaining debts will be written off.
9. Start over with a pre-pack administration
Finally, if your company is struggling to pay its debts but would be viable if it could be re-started, a pre-pack administration is a legal insolvency procedure that enables you to restructure a struggling company by packaging it and selling it to a new company.
A liquidator will be appointed to wind up the existing company, and a new company (often controlled by the same directors) will be set up ready to buy the assets and the business. Once the company is sold to the new company, you can restart without your debts.
How a local insolvency practitioners can help
If your company is facing financial difficulty and the threat of insolvency is looming over you due to rising energy costs, it’s important to act fast and seek the help of local insolvency practitioners as soon as possible.
At McAlister & Co, we are business rescue experts - so if you are looking for help and advice on how to protect your company from insolvency, contact our team today to discuss your next steps.
