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‘More to be done’ to support small businesses with energy debts

Money Advice Trust-commissioned research examines the impact of energy debt on small businesses.

The Money Advice Trust has today published research carried out by the University of Bristol’s Personal Finance Research Centre exploring the impact of energy debt on small businesses. The Trust has also published a number of recommendations for industry, government and the regulator to ensure small businesses have the support and protection they need.
The qualitative research, based on interviews with small business owners who engaged with Business Debtline, explores their experiences of falling behind on bills, dealing with energy suppliers and seeking debt advice.
While primarily focused on energy debt, the report also provides insight into people’s experiences of setting up and running a small business and how they deal with business finances. The findings show that more support is needed for small business owners, and that energy suppliers need to consider the ‘person behind the business’.
For many small businesses, gas and electricity are often significant running costs and falling into arrears can have serious implications for a business. The research highlights the limited engagement many of those interviewed had with the energy market. For many, engaging with an energy provider was not seen as a priority. This included when taking on new premises, with few of those interviewed shopping around to secure a good deal on energy.
Very little difference was also seen in terms of skills and capacity to navigate the energy market, between small business owners and domestic energy customers.
The findings also show mixed experiences when interviewees engaged with suppliers and took advice. Some reported being unable to reach an arrangement when negotiating with their provider, stating that their supplier was unhelpful or uncommunicative.
However, many suppliers were shown to signpost customers to debt advice through Business Debtline and, crucially, provided ‘breathing space’ from debts to allow the business time to start addressing their debt.
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline said:
“I would like to thank Sharon Collard and her team at the Personal Finance Research Centre for their hard work in bringing together this important research. At Business Debtline we hear on a daily basis the impact energy debt can have on small businesses.
“While it is positive to hear of the work many energy suppliers are doing in supporting small businesses with energy debts, there is more work to be done to ensure that the right support is provided earlier on for those struggling.  
“We look forward to working with energy suppliers, trade associations and all those involved in the sector to discuss the implications of this research and to progress our recommendations.”
Sharon Collard, director of the Personal Finance Research Centre at the University of Bristol said:
“Small and micro-businesses are a vital part of the UK economy. This new research helps to fill important gaps in knowledge about the people who run small and micro-businesses and the financial problems they can face.
“One of the biggest take-aways from the research is that some energy debt problems are wholly preventable by having better systems for metering and billing business energy use.”
For more information about the report click here.
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