Understanding Your Business Utility Bills: A Guide

If you run a small business, every penny counts, and your utility bills are a big chunk of the finances you’ll be paying out every month, so how exactly are they calculated, and what are the benefits of learning how bills are calculated?

The benefits question is the easiest to tackle. Very simply put, the benefit of knowing how your bills are calculated directly translates into you know how you can reduce them, and reducing your bills saves you money in the long run, and money you can put back into your business. 

Which Bills?

To understand how your bills are calculated, you’ll need to know the different bills you have, and how you pay for them.

Bills, such as electric and water, are usually paid to utility companies, and they are different from business rates, which are usually paid to a local council or authority. Getting the best prices, such as finding the best business water prices, for example, is usually easier than negotiating a rate decrease with your local authority. Many suppliers will give business discounts if they are paying by direct debit and/or paying for a largest chunk at once such as quarterly rather than monthly, and so by comparing these, you can always find the best deal.

How Are Bills Calculated

There are usually two methods for calculating your utility bills (including your business water rates), which are either metered or tariff. With both calculation types, you may be subject to a standing charge and tax on the bill too. 

Usually, business energy bills are calculated by units used times by unit rate (price), multiplied by any standing charge. Most energy companies prefer you to spread your payments out evenly across the year, despite the fact that you are likely to use more electricity and gas during the winter months than the summer months.  

Your tax and discounts are usually deducted from the final yearly amount and spread out over the months if you pay monthly. 

How To Reduce Your Business Utility Bills

One of the easiest ways to reduce your business energy bills is to submit meter treadings at regular intervals. When you initially switch supplier, your monthly payment amount will likely be estimated, and you could end up paying more than you owe if you don’t keep your new supplier updated with regular readings.

Other ways to reduce your business bills include becoming greener in your thinking. For example, start by being very strict about turning off lights when they are not needed, waiting an extra week or so to put the heating on, and even investing in energy-efficient appliances and electricals for your business.

The little things will make a big difference when it comes to saving energy and saving money, and even small changes that a business makes can make a big difference in the long run to the business finances.

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