Energy Suppliers Force Small Firms to Pay Bills Upfront
Small firms are being forced to pay their energy bills months in advance, the Federation of Small Businesses (FSB) has claimed, as suppliers seek to protect themselves from the increasing number of businesses becoming insolvent.
According to FSB spokesman Stephen Alambritis, an estimated 250,000 small businesses have been contacted by their energy company in recent months and asked to pay an element of their bills upfront. “Some firms have had to pay their bills seven months in advance,” he said.
Alambritis said that EDF, Scottish Power, E.ON and British Gas are among those suppliers which have recently tightened their payment arrangements. “The energy companies have been concerned by the high level of bankruptcies, but asking for money upfront puts businesses in an even more precarious situation,” he said.
Ofgem, the UK’s energy regulator, said that steps were being taken to improve the situation. At a recent meeting, it warned the UK’s six biggest energy suppliers that a full investigation may be launched unless measures were introduced to ease tough conditions for small firms.
“We have made it clear to suppliers that if this voluntary approach isn’t successful the option remains for us to launch an investigation, or refer the issue to the Competition Commission,” said an Ofgem spokeswoman.
However, the FSB has expressed concern that the situation could worsen over the coming weeks, as businesses traditionally sign up to new contracts with their suppliers in the autumn.
“Firms have been finding it more difficult to secure contracts from suppliers without big deposits and other restrictions, while trade credit insurers, which pay the bills of companies entering insolvency, are increasingly rejecting applications for new energy-supply contracts,” said an FSB spokesman.