Just as news hit the press that investors are becoming increasingly cautious about investing in alternative power technology due to ‘fuel poverty’ in a stagnant economy, E.ON announced plans to benefit SMEs in the UK. Much of their strategy lies in the way businesses will be billed to avoid backdating three-year bills, but this is just the beginning of how the energy supplier intends to assist businesses in their plight to keep up with the rising costs of electricity and gas.
In the past, major suppliers had been giving a bit too much leeway in back payments and this caused a great number of businesses to accumulate bills which became unmanageable at some point in time. This ‘forgiveness’ was meant to give companies time to collect on invoices or acquire the capital to pay debts but unfortunately, it often worked in the reverse. Business customers defaulted on payments and many even became insolvent during this time.
Now, E.ON plans to contact business customers far earlier when accounts become delinquent in order to discuss whether or not they are able to pay the bill at this time and if not, the company will attempt to establish some sort of repayment plan. In this way, businesses will not build up a huge debt and this, in turn, will benefit both the SME as well as the energy supplier. The inability of firms to keep their accounts current is the main reason why investors are not placing their money in alternative energy technology.
Recently, PwC released their findings on the skyrocketing costs of electricity in the UK and throughout Europe as well. At the heart of the matter was the fact that investors are pulling back from improvements in power generation because too many countries are experiencing energy poverty. Energy suppliers are not able to collect on a significant portion of money owed to them which decreases their profits overall. With E.ON’s new billing strategy, this should be avoided much of the time. By catching business accounts in arrears earlier, large deficits can be avoided.
Tony Cocker, chief executive of E.ON in the UK, stated that one of the company’s priorities will be to improve sales standards for SMEs and this is why they are introducing a new ‘code of practice’ in the hopes that others of the Big Six will follow suit. It is E.ON’s goal, according to Cocker, to approach and invite other energy suppliers to participate in this single code. If this concept can become an industry standard, the whole sector will benefit as a result.
By helping businesses in the UK to stay more current on electricity and gas bills, not only will energy suppliers and brokers benefit, but the end consumer will benefit as well. Businesses will be better able to manage their debts and investors will be more likely to finance continuing efforts to improve energy generation. Of course cost of production is a key factor but finding alternative means of producing electricity for a carbon neutral UK is also of prime importance.