Business energy debt: a real predicament for SMEs

Energy debt is a real issue for the UK’s SMEs, predominantly caused by metering and billing issues. Small businesses account for more than 99% of the private sector in the UK yet there is little published about the amount of financial debt, particularly energy debt, these businesses are facing. According to a recent research report from the Money Advice Trust looking into supporting SMEs with energy debt, of the 22 SMEs interviewed, 14 of them had energy debt that stemmed from issues with metering and billing. Extrapolating this research statistic, that suggests that more than half of the UK private sector could be struggling with energy debt. So, what is energy debt and why is there so little discussion on the issue facing SMEs? Energy debt is caused by a business paying less for the energy it is using. Businesses are unknowingly putting their account with a utility supplier into debt with each passing month. The debt soon mounts up with reports of figures from £1,500-£70,000. In the most part, energy debt is caused by metering and billing problems. Billing problems occur when utility suppliers rely on estimated bills that underestimate actual usage. They set the SMEs direct debit too low and by the time a true read is taken or submitted, the SME faces a back bill and in most cases, a demand to pay in one lump sum. Metering issues are even more worrisome for SMEs. Faulty components mean many of the UK’s 53 million gas and electricity meters are inaccurate. Consumer group Which? analysed government figures for disputed gas meters and found an average 24% tested every year, since 2006, have been running too fast or too slow. As with billing issues, once a meter has been fixed there is a back payment request by the utility supplier. Metering and billing issues, and the resultant energy debt, is a big issue for many small businesses. It can put a huge strain on cash flow and if not paid, can also result in disconnection, which would render many businesses unable to operate. Working with a reputable broker like the award-winning team at SK Energy can help SMEs realise the amount of energy debt they are in and work with the utility suppliers to find an agreeable course of action that is beneficial to the SME – and has minimum impact on their cashflow. Jason Patel, Head of Business Development at SK Energy, said: “Third party intermediaries (TPIs) like SK Energy can be the middle ground between the supplier and the SME, helping to not only source suitable tariffs and contracts but remedy the issues that can lead to energy debt. Rectifying meter and billing issues and establishing suitable payment plans on behalf of the SME are critical to ensuring that a demand for a lump sum payment does not force the business into liquidation.”


SK Energy’s specialist energy procurement team have years of experience in the industry and are ready and waiting to work with you. If you are interested in switching or renewing your business energy contracts today or just looking for some advice call on

01933 448622 for a free business energy healthcheck, email

sales@skenergy.co.uk or visit www.skenergy.co.uk