Struggling SMEs face financial penalties

Independent business energy broker uSwitchforbusiness.com has warned that small businesses face high costs when trying to secure an energy deal. James Constant, Director of uSwitchforbusiness.com, said: “Britain’s small businesses have […]

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By Tom Gibson

Independent business energy broker uSwitchforbusiness.com has warned that small businesses face high costs when trying to secure an energy deal.

James Constant, Director of uSwitchforbusiness.com, said: “Britain’s small businesses have unknowingly been facing a lottery when it comes to the price they are going to pay for their energy. To benefit from the most competitive prices and beneficial terms they have to pass a credit check. If they don’t pass with flying colours they can be left paying over the odds or may have to hand over a lump sum payment upfront as security to the energy supplier. This can be particularly tough on start-ups or businesses that are struggling through no fault of their own.”

Research conducted by Onepoll showed that struggling SME’s were often getting stung by extra fees when starting up.

11% of those surveyed had to pay more for their energy following a credit check, with suppliers potentially raking in £109m and 25% had to pay upfront fees just to secure a contract, costing businesses a further £361m.

Mr Constant said it was important to look around to avoid heavy hidden costs: “The reality is that there is little or no transparency in the business energy market and the fact that quoted prices are subject to a credit check simply adds another layer of complexity and confusion that SMEs have to overcome. Every supplier has different acceptance criteria, so it’s always worth shopping around.”

According to the research many business owners are unaware about credit checks. 21% don’t know that businesses are credit checked for business energy contracts, while 22% are unaware that a credit check could impact on the price their company pays for energy.