It’s tougher than ever before for UK businesses. Soaring energy bills, rising inflation and the risk of recession means we are living in turbulent times.
UK gas prices have reached an all-time high, with nearly two-thirds of businesses reporting that energy costs alone count for up to 20% of their total expenditure, and with many companies struggling to keep on top of their bills, it is likely that we will see more and more insolvencies over the coming months.
But what is going on with the energy crisis? What happens if your business becomes insolvent? And what happens to your utility bills if you restart your business following insolvency? Read on to find out…
What’s the government doing to help?
The government has announced plans to protect businesses from the worst potential impacts of soaring energy bills by discounting supplies to enterprises across the country.
As such, all UK businesses, as well as charities and public sector operators, will see their gas and electricity prices significantly restrained over the winter months, with new discounts coming into effect from October 1st and relating to all energy use until the end of March 2023.
Known as the ‘Energy Bill Relief Scheme’, the good news is that these discounts will be automatically applied - so you don’t have to do anything to reap the benefits.
The challenge of utilities in business insolvency
But what if it’s too late and your business is already facing insolvency? Energy supply firms that don’t immediately cut vital supplies can often place an insolvent company on a higher tariff, making financial positions even worse.
Other suppliers can sometimes demand a ransom payment before they continue their contractual arrangements - and the money spent on appeasing these providers is money lost to creditors.
What’s more, business insolvency and utilities is also a tricky subject because it’s hard to know where to draw the line. For example, a business might no longer be trading having entered administration or liquidation, but somebody could do something as innocent as switching on the lights.
In such scenarios, who is liable to pay for the ongoing supply? This is why it’s so important, if you do restart your business following administration or liquidation, to make sure you don’t end up paying for any utilities that you shouldn’t.
5 ways to ensure you pay the right utilities when restarting your businesses
1. Register a new company (even if at the old address)
When setting up your new business, even if it is going to be at the same address, you should ensure to register the new company.
Take advice from a business accountant about what sort of entity you should use, however, most businesses register as a sole trader, limited company, or partnership:
Limited companies
If you form a limited company, one of the biggest benefits is that the company’s finances are separate from your personal finances, however, there are more reporting and management responsibilities.
Sole traders
It’s much simpler to set up as a sole trader, but it does mean that you are personally responsible for your business’s debts. You will also have some accounting responsibilities too.
Partnerships
A partnership is the simplest way for two or more people to run a business together. When you are in a partnership, you share responsibility for your business’s debts and also have shared accounting responsibilities.
2. Take photos of the meter
You’ll then need to ensure that any gas and electricity bills you will be paying under your new business are accurate.
Take meter readings as soon as possible so your future bills will be based on actual meter readings rather than estimated usage, and we would always recommend taking photos of your meters when you take the reading as well, so you have evidence.
That way, if you believe any bills in the future are incorrect, you can challenge your supplier.
3. Shop around
Just because you used one utility provider in your previous venture, it doesn’t mean you have to use the same one again.
Check prices and rates so you can make the best decision about which options to go with. You might even find that suppliers you hadn’t previously considered offer some attractive opening deals!
4. Use a utility broker
If you don’t have time to search providers and get quotes yourself, it’s always a good idea to find a good utility broker with access to all providers. Not only will they be able to source the best deals in the market, but they also have in-depth industry knowledge and will know which supplier is best for your personal circumstances.
So, whether you have credit problems with a certain supplier due to your previous financial struggles, or want to consolidate your water billing, they’ll have the know-how to get it all sorted.
5. Try to reduce energy costs
Once your new business is all set up, it’s important to start things off on a positive note by trying to keep your energy costs low from the get-go. Some things to think about include:
- Turning equipment off rather than leaving it in standby mode which can be more expensive
- Monitoring your energy usage by getting a smart meter so you can see the real-time cost of your energy consumption
- Double checking your bills and ensuring there aren’t any supplier errors
- Staying competitive by switching energy suppliers when your contract is up
How McAlister & Co can help
Times of financial uncertainty can be stressful, but with McAlister & Co, you don’t have to face financial difficulty alone. Call us now on 03300 563 600 or contact us here for free initial advice on starting a new venture after insolvency and for more information on utility bills and the energy crisis.
Rest assured, we don’t need personal or company details to answer initial questions, and all our advice is completely confidential.
