Increasing demand, inflation, and the ongoing conflict in Ukraine (amongst other things) means that energy prices are soaring and bills are a growing concern for small businesses across the UK.
Ofgem, the UK energy regulator, recently introduced the domestic energy price cap to help suppliers recover money lost over the last 12 months. However, commercial businesses do not have the benefit of a price cap meaning large and especially small businesses still remain vulnerable to energy price increases.
It has been reported that the price of wholesale gas has gone up by 250% since January 2020 and small business owners believe that they may not survive the winter due to increase in their energy bills.
With the end of the pandemic and therefore the end of limited restrictions relating to winding-up petitions, which ended on 31 March 2022, the amount of insolvencies within small businesses has increased. There has been a 60% increase in insolvencies in 2022 compared to 2021 which is of course a concern.
An increase in energy prices will result in businesses having less funds to wages and creditors which therefore may result in insolvency if cash flow is very tight. With nearly one in three small to medium companies in the UK being concerned about energy prices rising, and with a lack of businesses having access to funding, directors should therefore consider future energy prices against the risk of insolvency.
If you are experiencing: poor cash flow, creditor pressure, lack of support from your bank and difficulties paying staff you should seek professional advice as soon as possible. Letting these issues continue could result in creditors applying to the court for a winding up petition, which could lead to a winding up order and the compulsory liquidation of your company. Taking advice as soon as you notice that there may be a problem will give you the best possible chance of saving your company from insolvency and making it a viable business once again.
For no obligation advice on your situation, get in touch with our experts today on 0845 287 0939, contact us by email, or through the online chat below.