If you’re struggling to keep up with the energy expenses for your business, it is important to reach out to your energy supplier as soon as possible. Open communication demonstrates your commitment to resolving the issue and allows you to find out what support they can provide.
Your energy provider may be willing to negotiate reduced payments on a temporary basis to ease the strain on your business’s cash flow or offer you additional time to pay back overdue amounts through a designated payment plan.
If there is no related domestic supply, energy companies may disconnect your business, and if you fail to reach out to them, this action may be taken sooner rather than later. This could severely compromise your ability to run your business efficiently and even bring operations to a halt.
What are your options if you are unable to pay for your company’s energy bills?
Here are some ways to improve the situation:
- Turn off equipment when not in use to reduce unnecessary energy consumption, for example, by avoiding standby mode for computers and printers.
- Regularly monitor your business’s energy usage to identify the areas where most energy is being consumed. Consider using a digital energy monitor that records energy consumption patterns as appliances are used.
- Verify the accuracy of your energy bills and contact your supplier if you see any unexpected charges or if all your bills are being estimated.
- Take accurate metre readings if you have any concerns about the accuracy of your bills.
- Do not ignore any correspondence or demands from your energy supplier.
- Seek professional insolvency advice as alternative funding options may be available to support your business.
Procedures for formally rescuing or reorganising to assist in paying energy bills
There are several ways to alleviate financial strain on a business and improve cash flow, such as renegotiating debts and restructuring operations. These include:
Company Voluntary Arrangement (CVA) – If the business is facing temporary financial difficulties, it may be possible to formally renegotiate unsecured debts through a CVA. A licensed insolvency practitioner (IP) works with creditors to reach new, more manageable repayment terms for the company. This arrangement allows the business to continue operating while resolving its financial issues.
Company Administration – In the event that the business is carrying significant debts and is at risk of being wound up, company administration may provide stability. During an eight-week moratorium, the administrator will develop a plan for the business, which could include a business sale or a CVA if the company is deemed viable for the future. During this time, no legal action can be taken against the company by creditors.
What happens if your business is unable to pay for energy and recovery is not possible?
If your business is unable to pay its debts and cannot be rescued, voluntary liquidation may be the only remaining option. In this case, you may be eligible for director redundancy, which can help cover the costs of the liquidation process and provide personal financial stability.
Creditors’ Voluntary Liquidation (CVL) allows you to fulfil your obligations as a company director and reduces the risk of allegations of wrongful trading or misconduct.
The recent sharp rise in energy costs is affecting a large number of financially struggling businesses. To address this challenge, it is crucial to seek professional advice early on.
InsolvencySupport.co.uk can support your business during this time by providing reliable, unbiased advice on the best course of action. To arrange a free, same-day consultation with our partner-led team, please get in touch. We have a network of offices across the UK.