How the business credit score can affect your energy tariffsby APSense News Release Admin
You cannot ignore the connection that is there between your energy pricing and business credit score. The business credit score can determine who your energy will be, the number of energy suppliers you can select, the type of energy deal available for you, and if the energy suppliers are ready to accept you. This is the reason why it’s important to have a good business credit score so that you can find the best energy deals on the market. This article discusses how the business credit score can affect your energy tariffs.
Understanding a business credit score
Remember that an individual credit score is different from a business credit score. This score is usually based on the chances of your business going out of business in the next year.
Each business can be rated on a scale that runs from 1 to 100. In most cases, the higher the score is, the better. This means a high rating is considered to be a stronger financial position. For example, if the rating is at least 40 and more, there are good chances that you can get cheaper energy rates.
There are a wide range of things that can affect your business credit score. This includes the size of your company, meaning the number of people working for your company.
If you fail or struggle to keep up with your business energy bills can also lower your business credit score. Finance applications can also affect your business credit score. Finance applications look at how many times you have applied for loans in the past. Therefore, they can look at successful and unsuccessful finance applications.
Also, if your business doesn’t belong to any group, then other businesses in these groups can affect your credit history. The credit history of the directors of your company can also have an impact on the business credit score.
Energy suppliers can check the credit score of your business to make sure they secure your payment. If there are some risks that you may default your payments, the energy supplier may not offer you the best energy deal.
It’s worth noting that energy is expensive and can be utilized in large quantities. Therefore, a failure to pay the business energy bills can be bad for the energy suppliers.
Some industry sectors are considered to be a higher risk than others. For instance, restaurants usually tend to have a high management turnover that leads to uncertainty. This is a major concern for many energy suppliers.
The truth is that having a poor business credit score can be bad for your company, especially if it’s considered to be a high risk one. By having a bad score rating, you can reduce your options of energy suppliers and tariffs.
Keep in mind that there are some energy suppliers on the market that may not accept businesses with a poor credit history or low credit score. Other energy suppliers can even prevent you from getting their best business energy deals.
But if the energy supplier decides to accept your company despite the poor credit history, it may still request for a security deposit. An energy supplier can also charge an extra premium, asking you to install a prepayment meter.
Business gas and electricity tariffs
Business energy tariffs are designed to fit your exact needs. It’s good to have this accuracy, though it can still be hard to figure out exactly how much it’s costing you when it comes to your business gas and electricity tariffs.
The needs of every business tend to differ, so many energy suppliers offer a wide range of energy tariffs designed to meet your needs. There are usually several types of energy contracts for businesses.
One of the energy contracts is called a fixed term contract that requires you to pay the same amount for each unit of your energy. However, this doesn’t imply that your energy bill can be the same every month because this depends on the amount of your energy usage.
There is also a variable-rate contract. With this energy contract, your unit rate can either increase or decrease during the duration of the energy contract depending on the market activity. Therefore, there is always a risk with this kind of tariff.
Another energy contract is a deemed rate contract also popularly called an out-of-contract tariff. This rolling contract comes with expensive rates that can be arranged by energy suppliers for clients who have no formal agreed contract.
Energy suppliers also offer a rolling 28-day contract for companies that fail to switch to another energy tariff after the energy market deregulation was effected. The energy unit rated they charge you can either increase or decrease.
Lastly, there is a rollover contract that applies when you fail to arrange for a new energy deal after the expiry of your contract. Therefore, your current energy supplier can decide to place you on a rollover contract. The energy supplier automatically signs you up for another year, but the energy rates can be the most expensive the supplier can offer.
Regardless of the size of your business, it’s always a good idea to compare energy suppliers at Utility Bidder and opt for a fixed contract. This option comes with few risks, and can be easier to determine your energy usage.
You should remember that many energy suppliers usually provide their best energy rates to customers who have good credit ratings. Hence, when you decide to apply for business energy tariffs, the energy supplier can run a credit check to determine your credit score. There are some studies that indicate one out of three businesses cannot access the cheapest energy rates because they don’t meet the minimum credit score threshold.
Start-ups and other businesses sometimes don’t have a credit history or can have a low credit score. If your business falls within this category, then energy suppliers may not offer you the best energy deals. This is because they are not sure that you can keep up with your energy bills.
You can improve your credit score by paying your energy bills timely. If you don’t pay your energy bills timely, then your credit score can suffer leading to expensive energy deals.
Created on Jan 17th 2022 19:13. Viewed 335 times.