Non-domestic energy suppliers and debt management

Published November 2023

Written by John Griffiths

For over ten years, John has been engaging with clients in the UK to help them better understand their commercial customers, advocating the smart use of business data to support them not just from a credit risk perspective, as is his current focus, but more broadly in assessing their needs in the market.

What can they do to overcome key challenges?

Commercial energy customers are under less pressure than they faced last winter, but many non-domestic energy suppliers will still have to manage rising customer debts this year.

Against a challenging economic and supply backdrop, data could be the answer to resolving rising levels of commercial energy debts. During our webinar on non-domestic energy and water on 4 Oct 2023, we explored how the power of data can help tackle the challenges of debt management.

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A brighter future?

The economy has proven resilient to high inflation, and the price of non-domestic energy has fallen from its peak last winter – but businesses are now feeling pressure from lower consumer demand, higher interest rates and taxation concerns.

Though the UK has managed to avoid a recession as of November 2023, there is a lot of pressure on small businesses. Average SME net current account credit-debit turnover has been negative for the entirety of 2023, which has historically only been the case for one or two months of the year. What’s more, delinquency rates for SME debtors are still up 50% on 2019 – and now, with the OPEC+ production cut, fuel prices have begun to rise again.

Managing energy price concerns

As wholesale energy prices are lower than they were in late 2022, commercial energy prices are no longer cited as the biggest worry for many businesses. Even so, 25% of small businesses are still at risk of energy-related financial difficulties, with micro businesses (those with fewer than 10 employees) most vulnerable. Both regulators and the media have highlighted that the country’s smallest businesses owe around £700m to energy suppliers and have higher utility disconnection rates.

Micro businesses aren’t the only challenge for non-domestic energy suppliers. More businesses of all sizes have entered into debt management programmes since mid-2021. There are also growing concerns over meter-tampering fraud and so-called phoenix companies avoiding unpaid bills. And with 10 suppliers serving 92% of the UK’s small businesses, collective customer arrears could severely impact utility companies.

Overcoming non-domestic energy suppliers’ challenges

The only way to manage growing potential for arrears is with reliable customer data. With Commercial CAIS, you’ll have access to data on over £193bn of outstanding debt across a range of UK commercial credit accounts.

Find out how Experian’s intuitive solution can help you overcome some key commercial debtor challenges in our latest non-domestic energy and water webinar – How the power of data can help tackle the challenges of debt management in 2023.

Reduce your bad debt losses with Experian’s latest Commercial Risk Score

Commercial Delphi Generation 6 is Experian’s latest commercial risk score used to assess a business’ likelihood of failure over a 12-month period. Commercial Delphi Generation 6 is industry-leading in its use of data – the first commercial risk score in market to use Commercial Credit Data Sharing Information (CCDS) including Current Account Turnover data and payment information on credit products to assess an organisation’s commercial viability.

This breadth of data enables more accurate credit decisions, and reduces bad debt.