With the UK on the verge of a potential recession and energy prices still soaring causing concern for many businesses, LWA have collaborated with award-winning Connected Purchasing platform – Reducer, with whom we are a Gold certified partner, to provide businesses with some useful tips on tackling the energy crisis.
Energy prices are reaching record rates in the UK
An increase in global demand together with supply shortages not helped by the Russia-Ukraine war, means that wholesale energy prices have surged. Businesses in the UK are facing bills up to five times the former market rate, further straining those that were already severely impacted by COVID-19, and analysts are expecting a second record surge still to come in 2022.
A lack of protection and business closures
With a lack of legislation in the B2B market, businesses are being left feeling the full force of price shifts. Sadly, an estimated 30% of businesses have remained closed to avoid these prices increases.
Furthermore, staggering wholesale prices are forcing suppliers as big as Bulb to enter administration or go bust, causing increased market uncertainty. Businesses under these suppliers will automatically be switched to another supplier - and placed on high, out-of-contract rates.
Domestic v Business utilities
Should businesses be listening to the advice in the news and from consumer money comparison websites which talk about being on variable contracts for energy supply? The short answer is no.
This is because the advice being given around domestic energy supply is very specific and takes into consideration things like the consumer price cap and the regulated market.
However, the business energy market isn't regulated and to stay on variable rates will be costly.
Make the most of tax reliefs
High energy usage businesses, such as steel and paper manufacturers, are set to receive further support for electricity costs as the UK government has confirmed details of the Energy Intensive Industries (EII) compensation scheme. The scheme will be extended for a further 3 years and its budget will be more than doubled.
The scheme provides businesses with relief for the costs of the UK Emissions Trading Scheme (ETS) and Carbon Price Support mechanism in their electricity bills, recognising that UK industrial electricity prices are higher than those of other countries. The scheme will now also provide support for companies that manufacture batteries for electric vehicles.
How can Reducer help my business?
Find out where you are overspending
Reducer will analyse your spend history to discover whether you are overspending on your bills, both in energy and in other areas. Reducer gathers all the information it needs by connecting to your Xero or QuickBooks account.
Switch to suppliers suited to your needs
Businesses should seek out contracts that offer more security for the future. Reducer creates bespoke purchasing recommendations for your business - all you need to do is choose which switches you’d like to take, and Reducer will handle the rest.
Be notified of changes in the market
You’ll stay up to date with both your current contracts as well as changes in the market. Your dedicated Reducer account manager will be on hand to guide you on any of your current or future core purchase decisions.
Contact LWA for further support
To learn more about Reducer and how it could positively impact your expenditure on energy bills, contact LWA’s inhouse accountancy software expert, Matt Jones on 0161 905 1801 or by email to matt@lwaltd.com. If you have a specific question about the tax reliefs available to help with your energy costs, please contact our tax team in Manchester on 0161 905 1801 or in Warrington on 01925 830 830.