Utilities contracts for business
By utilities I am talking specifically about Energy, Broadband, fixed line Telephones and Mobiles. The first thing to decide is if you actually need business utilities. Many start-up businesses and SME’s can and do work from home. If that is you, then you don’t need any specific business utilities but you do need to get the advice of an accountant to guide what you can claim and what to declare.
It is completely different however if you operate from business premises.
Firstly and most importantly the Term’s & Condition’s for utilities you get at home are completely different to those for businesses. Business utility contracts have less flexibility and it is much more difficult to move suppliers.
To leave a contract you need to inform the supplier during the negotiation period which is often several months before the contract end date. Should you miss that date you will be tied in for another period of time (at least a year) during which the supplier can charge what they like.
So what should you do? A business that starts from business premises may well already have business energy supplied to the premises as well as telephony/broadband. You need to carefully check your options and check the terms and conditions before you agree to a contract. The big companies will offer what appear to be very attractive rates with a contract term. Written into the T’s & C’s are the dates of the negotiation period.
About four months before the contract end date a letter may arrive from the supplier pointing out your contract is coming to an end in some four months time. The next sentence usually says “You don’t have to do anything now” or words to that effect. If you don’t do anything you will automatically have a new contract which is likely to be at an inflated price (sometimes doubling your costs) and you will be unable to exit the contract until the next negotiation period.
Forgetting to negotiate a new contract, either with your existing supplier or a new one, will undoubtedly increase your utilities costs and impact the profitability of your business. Many businesses find it saves time, money and effort to use a utilities broker who handles contract negotiation for them, but there are also business utility suppliers who don’t tie businesses into lengthy contracts or have complicated terms and conditions which make it difficult to leave them.
My top tips:
- When starting out in new business premises, check any utility contracts you are asked to sign carefully and get advice.
- If you already have a contract, make sure you know when the negotiation period will start and take advantage of it.
- Make sure you compare suppliers before signing a new contract – not just on price, but also on their terms and conditions. Whilst lengthy contracts can bring peace of mind they can also include hidden traps which will come back to bite you in the future!
If you have an accountant, they should be your first stop for business advice. If you don’t have an accountant or they can’t help, BuBul has a wide range of experts available. For more advice on business utilities contracts, contact our expert* James on LinkedIn.
*We’ve picked experts we know and trust who are good at what they do. All of them will give you at least an extra 30 minutes free advice if you contact them and would then charge their normal prices. They don’t pay to be on BuBul and don’t give us any money from anything they earn as an expert.
