If your business is falling behind on gas or electricity bills, it can feel as if everything is closing in at once. The figures may already be higher than you have ever seen, and the thought of disconnection on top of rent, rates and tax arrears is enough to keep anyone awake at night.
Business energy debt does not automatically mean the end of your company. There are rules suppliers must follow, growing protections for smaller firms and practical ways to deal with arrears alongside your wider debt position. This guide explains how business energy debt builds up, what suppliers and brokers can and cannot do, and what you can do to protect your business before disconnection becomes a real risk.
What Is Business Energy Debt?
Business energy debt is money your company owes for gas or electricity supplied under a commercial contract that has not been paid in line with the agreed terms. You might also see it described as non-domestic energy debt. It covers limited companies, partnerships, sole traders, charities and public bodies on business tariffs rather than household tariffs.
Arrears often start to build when cash flow is already tight. Higher tariffs after the energy crisis, slower customer payments and other rising costs mean it only takes a missed bill or two before you start to fall behind.
Business customers do not have the same detailed protections as domestic consumers. There is no retail energy price cap for businesses, and the rules on debt and disconnection have historically been less prescriptive. Citizens Advice has highlighted a “protection gap” for microbusinesses, where inconsistent billing and poor practices can allow debt to build quickly.
The level of protection you have depends partly on how your business is classed. Microbusinesses and some smaller firms benefit from additional rules around contract information and dispute resolution, while larger non-domestic customers are expected to have more resources and bargaining power. Ofgem’s recent review of the non-domestic market has started to raise the floor for everyone, with a stronger focus on fair treatment.
How Does Business Energy Debt Build Up?
Business energy debt rarely comes from a single missed bill. It usually reflects a mix of high prices, complex contracts and wider cash flow pressure across the business.
Rising Prices and Tough Contracts
Many businesses fixed their energy contracts at the peak of the energy crisis. If you agreed a deal when wholesale prices were very high, you may still be paying far more per unit than more recent customers, even as the market has eased.
Common contract issues include:
- Long fixed terms agreed at high rates
- Automatic rollovers into new contracts if you miss a renewal window
- High standing charges that keep costs up even when usage falls
If a broker arranged the contract, their commission may be built into the unit rate. In some cases, commission has significantly increased the effective price per kWh without the business realising, which is one reason regulators and charities have pushed for clearer rules on transparency.
Billing Problems and Estimates
Billing issues can cause business energy debt to grow quickly, even where the tariff itself is reasonable. Typical problems include:
- Several months of estimated bills, followed by a large “catch up” bill once an accurate meter read is taken
- Delayed bills after a change of supplier, leading to multiple periods being invoiced at once
- Incorrect meter details or wrong opening reads after a change of tenancy
If cash is already tight, a sudden back bill for several months of usage can be impossible to clear in one go. Unless you contact the supplier and agree a plan, reminders and collection activity can start quickly.
Operational and Cash Flow Pressures
Energy arrears often appear alongside other problems, such as:
- Slower customer payments
- Rising costs for stock, wages and insurance
- Pressure from HMRC on VAT, PAYE or Corporation Tax
- Business rates arrears with your local council
You may find yourself choosing which bills to pay first each month. Many directors try to protect wages and key suppliers, hoping to “catch up” on energy later. Over a few months, a manageable shortfall can become a serious backlog.
If business energy arrears are building alongside rent, business rates and tax debts, it may be a sign that the company is no longer able to meet its obligations as they fall due. If you are closing a company with debts, the licensed insolvency practitioners at Anderson Brookes can help directors review all pressures together and decide whether the business is still viable.
You don’t have to go through it alone. Anderson Brookes can help you with business energy debts. Get in touch with our licensed insolvency practitioners now: call 0800 1804 935 or email advice@andersonbrookes.co.uk.
Supplier Rules and Protections for Business Customers
Although business customers do not have the same level of protection as households, suppliers do not have a free hand. Ofgem sets the overall framework for how they must treat you, and recent rule changes have strengthened protections for non domestic customers, especially smaller firms.
Ofgem’s Role and Recent Changes
Ofgem regulates gas and electricity suppliers in Great Britain. Following a review of the non domestic market, it has introduced new and updated rules that are intended to deliver:- Fairer treatment for all non domestic customers
- Better support for firms that are struggling
- Improved transparency around contracts and costs
What Fair Treatment Should Look Like
Under these rules, suppliers should:
- Communicate in a way that is clear, accurate and not misleading
- Make it easy for you to understand prices, contract terms and charges
- Handle complaints promptly and fairly
- Take account of your circumstances, especially if you are in financial difficulty
In practice, you should be able to see how your prices have been set, understand any additional fees or broker commissions and get clear information about what will happen if you fall behind on payments.
Microbusiness Protections and Dispute Resolution
Microbusinesses still benefit from some of the strongest specific protections in the non domestic market. Citizens Advice has long argued that this group is at particular risk from mis-selling and inconsistent billing, which is why additional rules focus on clearer contract information and transparency around broker commissions.
If you are a microbusiness or small business, you may be able to take unresolved disputes with your supplier or broker to the Energy Ombudsman, once you have followed the supplier’s complaints process and either received a “deadlock” letter or waited the required time.
Keeping written records of bills, contracts and correspondence will make it easier to use these routes if you need them later.
Debt Collection and Disconnection: What Suppliers Can Do
When your company falls behind on energy bills, suppliers usually follow a series of steps before they consider cutting you off. It can feel abrupt from your side, but there is normally a pattern to the letters and calls.
Warnings, Reminders and Formal Notices
Most suppliers move through stages such as:
- A reminder showing the overdue balance
- A further reminder or “final demand” if payment is still not made
- A notice warning that the account may be passed to a debt collection team
- A formal notice of disconnection if arrears continue
Disconnection notices should explain how much you owe, what you need to do and by when. Notice periods vary between suppliers, but you should usually receive written warning giving at least several days to respond, and often longer. Ofgem expects suppliers to give non-domestic customers a fair opportunity to engage and to discuss options before supply is cut, rather than moving straight from a missed bill to disconnection.
Debt Collection Agencies and Enforcement
If arrears are not resolved, suppliers may:
- Pass the debt to an internal collections team
- Instruct an external debt collection agency
- Start court proceedings to recover the balance
Debt collection agencies can write, call and request payment, but they do not have the same powers as enforcement agents unless a court judgment has been obtained and further steps have been taken.
If the supplier does obtain a County Court Judgment against the company, they may then ask enforcement agents to attend your premises. Our guide on bailiffs and company debt explains what enforcement agents can and cannot do and how this fits into the wider creditor picture.
When Disconnection Becomes a Real Risk
Disconnection is usually a last resort. It costs suppliers time and money, and they may lose you as a customer. It becomes more likely where:
- Bills have gone unpaid for a sustained period
- You have not responded to repeated letters and calls
- Agreed payment arrangements have been broken
- The supplier believes there is little realistic chance of the arrears being cleared
For many businesses, loss of gas or electricity would stop trading immediately. In sectors such as hospitality, manufacturing or cold storage, even a short interruption can cause serious loss of stock and reputation. If you are receiving disconnection warnings and know the arrears cannot be cleared from cash flow, it is important to step back and look at the whole business rather than just one supplier.
Sectors We Support
We support company directors in every sector, from construction firms and logistics companies to pubs, cafés, restaurants, hotels, retailers and manufacturers. Our advice is always clear, confidential and shaped by real experience in your industry. Whether you’re dealing with unpaid tax, supplier pressure or falling income, our team understands the challenges and will guide you through the best next steps.
Business Energy Brokers and Hidden Commissions
Many companies use business energy brokers because they do not have time to compare tariffs themselves. A good broker can save you time and help you avoid obvious mistakes. A poor one can lock you into an expensive deal and add hidden costs that make business energy debt much harder to manage.
How Brokers Fit Into Your Contracts
Business energy brokers, often called third party intermediaries, sit between you and the supplier. They might:- Gather quotes from several suppliers
- Recommend a tariff and contract length
- Handle paperwork and switching
- Arrange renewals when your contract ends
Commission, Mark-Ups and Transparency
Brokers are paid in different ways. Some charge a clear fee that you pay separately. Many are paid through commission added to your unit rate per kWh or to your standing charge. Problems arise when:
- Commission is added to the price without being clearly disclosed
- The total commission is very high compared with the size of the contract
- The broker implies their service is free even though the cost is bundled into your bill
Citizens Advice has reported cases where hidden commission has added thousands of pounds to small business energy bills, and Ofgem’s reforms expect suppliers to improve transparency around how costs are built into prices.
If you are unsure how your broker is paid, you can ask for written confirmation of any commission or fees and a comparison between the supplier’s base rate and your contracted rate.
Disputes with Brokers
If you suspect mis selling or unfair commission:- Complain in writing to the broker and, where relevant, to the supplier that accepted the contract.
- Ask for a full breakdown of any commission or mark-up included in your tariff.
- If you are a microbusiness or small business, you may be able to take unresolved disputes to the Energy Ombudsman or another accredited dispute resolution scheme for energy brokers.
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First Steps If Your Business Falls Behind on Energy Bills
When you first fall behind, the most helpful thing you can do is slow the situation down, get the facts in front of you and then speak to the supplier before disconnection is on the table.
1. Gather Your Bills and Contracts
Pull together:
- Recent gas and electricity bills
- Any reminder or disconnection notices
- Your current energy contract
- Emails and letters from any broker involved
Check each bill for:
- Account number and supply address
- Unit rates and standing charges
- Whether readings are actual or estimated
- Any extra charges or adjustments
Keeping everything in one place makes later conversations with your supplier or adviser much easier.
2. Confirm How Your Supplier Classifies Your Business
Protections are often stronger if you count as a microbusiness or small business, so it is worth asking your supplier how they classify you for regulatory purposes. If they confirm that you are a microbusiness, make a note of who told you and when. That can help later if you need to rely on specific protections or redress schemes.
3. Work Out Who You Are Really Dealing With
Clarify:
- Your current supplier for electricity and gas
- Any broker that arranged or renewed the deal
- Contract start and end dates
- Any notice period to avoid automatic renewal
If the documents are unclear, ask the supplier to confirm the contract end date and any rollover terms in writing.
4. Take a Quick Cash Flow Snapshot
Note:
- Average monthly income over the last few months
- Essential outgoings, including wages, rent, business rates, tax and key suppliers
- The current energy arrears and your ongoing usage
This helps you answer three questions:
- Can you clear the arrears in one payment without harming the rest of the business?
- If not, what monthly amount could you sensibly commit to, alongside future usage?
- Are other creditors also pressing, or is energy the only serious arrears at the moment?
If several creditors are already demanding payment, it may be time to look at the wider position rather than treating energy in isolation.
5. Contact the Supplier Before They Contact You Again
Once you have your documents and a rough idea of what you can afford, it is usually better to contact the supplier rather than waiting for further demands. Explain briefly why you have fallen behind, confirm you want to deal with the arrears and set out what you can realistically pay now and each month.
Ask clearly for a payment plan or other arrangement that avoids disconnection and keep notes of who you spoke to and what was said. A short follow up email confirming the discussion creates a useful record.
6. Get Independent Advice If the Numbers Do Not Work
If you can already see that the arrears and ongoing bills are far beyond what the company can pay, it is important not to promise payments you cannot keep up with. This is often the point where it helps to speak to a licensed insolvency practitioner. We can look at your energy arrears alongside rent, business rates, supplier and tax pressure and help you decide whether the business can be stabilised or whether a more formal solution is safer.
Negotiating Business Energy Debt to Avoid Disconnection
Once you have a clear picture of what you owe and what you can afford, the next step is to turn that into a conversation with your supplier. The aim is simple: agree a realistic plan that keeps supply on and gives you some breathing space.
You do not need to sound like a finance expert. You just need to be honest, prepared and clear about what you can and cannot do.
Structuring the Conversation
Before you get in touch, gather three things and keep them in front of you: your most recent bills and arrears balance, your contract details, and a rough budget that shows what the business can genuinely afford to pay.
You can then frame the call or email around four points. Start by acknowledging that you know the account is in arrears and that you want to put things right. Follow that with a short explanation of how the arrears built up, for example slower customer payments, a seasonal dip or a one off expense. You do not need to go into every detail, but there should be a clear reason.
Next, move on to the numbers. Set out what you can pay immediately and what you can afford to pay on a regular basis alongside ongoing usage. Being specific helps, so refer to actual amounts rather than vague promises. Finally, make it clear that your goal is to agree a plan that avoids disconnection and allows you to keep trading while you repay what you owe.
If phone calls feel stressful, write these points down and have them in front of you. After the conversation, send a short email confirming what was discussed so there is a written record.
What You Can Ask For
Suppliers are not obliged to say yes to everything, but it is reasonable to ask them to consider different ways of clearing the arrears. You might suggest spreading the debt over several months, adjusting your payment date so it lines up better with income, or increasing your regular payments by a set amount rather than trying to clear everything in one go.
Where there has been a large back bill after a long period of estimated readings, you can ask them to spread that catch up amount over a longer period as well. The important thing is that whatever you agree must be affordable. It is usually better to put forward a modest plan that you can keep up with than to accept a heavier schedule that is likely to fail.
Checking the Accuracy of Bills
It is sensible to check that the arrears figure is correct before you commit to any arrangement. You can start by confirming whether the outstanding balance is based on actual or estimated readings. If most recent bills are estimated, provide a current meter reading and ask the supplier to rebill on that basis.
If the bill shows a sudden jump in usage that does not match your operations, query it and ask for an explanation. You can also request a simple breakdown of charges, separating unit rates, standing charges and any other fees. Where a broker has been involved and prices seem high, you are entitled to ask how any commission has been built into the rate and to request that information in writing.
Resolving billing questions does not mean you have to delay all payments. In some cases, it may be sensible to make a part payment that you know is due while the supplier checks the details of the remaining balance.
When Business Energy Debt Points to Deeper Insolvency Problems
Unpaid business energy bills are often one of the clearest warning signs that the company is running out of room to manoeuvre. The key question is whether this is a short-term cash flow issue or a sign that the business is no longer able to pay its debts as they fall due.
Warning Signs that Go Beyond a Bad Month
Energy arrears are more serious when you also see:
- Regular juggling of VAT, PAYE or Corporation Tax to cover day to day costs
- Business rates falling behind with your local council
- Constant pressure from trade suppliers or landlords for late payments
- Use of personal credit cards or savings to cover basic running costs
- Delayed staff wages or paying wages in stages
If several of these are happening at once, energy debt may be a symptom rather than the cause. At that point, it is sensible to ask whether the company can realistically trade out of its difficulties or whether carrying on would simply increase the overall shortfall.
When High Energy Costs Tip You Over the Edge
For some sectors, energy is one of the biggest single costs. Hospitality businesses, manufacturers, engineering firms and cold storage operations have all been hit hard by sustained high prices. In recent years, we have seen more CVLs where rising energy costs were a major factor in the decision to close, alongside other pressures.
If your energy bills have increased sharply and there is no realistic way to pass that cost on to customers, it may be the final push that turns a marginal business into a loss making one.
Why Timing Matters for Directors
UK insolvency law expects directors of an insolvent company to put creditors’ interests first. Continuing to trade and take on new credit when there is no reasonable prospect of avoiding insolvent liquidation can increase the risk of criticism or personal claims later.
Taking advice early can help you avoid actions that might be questioned in future, give you more choice about whether to try for an informal turnaround or move to Creditors’ Voluntary Liquidation and allow you to talk to key creditors, including your energy supplier, with a clearer plan.
Options If Energy Arrears Have Become Unmanageable
If you can see that the business cannot clear its energy arrears and keep up with other key bills, it is important to widen the discussion. At this point you are not just dealing with a difficult supplier. You are deciding what is safest for you, your staff and your other creditors.
Informal Restructuring with Creditors
Sometimes the business is still viable if pressure can be taken off for a period. In that situation, you may be able to:
- List all unsecured creditors, including energy suppliers, landlords, councils and HMRC
- Work out what the business can realistically afford to pay each month
- Offer each creditor a fair share of that amount based on what they are owed
You might, for example, ask the energy supplier for a longer-term payment plan, request time to pay from HMRC and agree staged payments with your landlord and key suppliers. The advantage is flexibility and the fact that you stay in control of trading. The drawback is that everything is voluntary and any one creditor can withdraw co-operation or take separate legal action.
We can help you decide whether informal deals are realistic and support you in preparing budgets and proposals that creditors are more likely to accept.
Creditors’ Voluntary Liquidation
Where debts are clearly unmanageable and there is no realistic way to agree sustainable arrangements with all creditors, it may be safer to look at a formal insolvency route. For many small and medium companies, the main option is a Creditors’ Voluntary Liquidation.
In a CVL:
- You and any co directors decide the company cannot continue
- You instruct a licensed insolvency practitioner, such as Anderson Brookes, to place the company into liquidation
- Trading stops in an orderly way, assets are realised and distributed to creditors according to the law
- Unpaid unsecured debts, including business energy arrears, are written off in the company
A CVL is usually appropriate where the company is insolvent and there is no realistic prospect of turnaround and where energy arrears sit alongside other serious debts such as rent, business rates and tax.
Options Available to You
When we talk about options, we will also look at your own situation, including:
- Any personal guarantees linked to energy contracts or other borrowing
- How closure would affect your income and household finances
- Whether there are any recent transactions that need careful handling
The law expects you to put creditors’ interests first once the company is insolvent, but that does not mean you must ignore your own wellbeing. Taking advice early helps you avoid decisions that might be questioned later and gives you a clearer view of what life might look like after closure.
Business Energy Debt: FAQs
Can my business energy supply be disconnected for unpaid bills?
Yes. Suppliers can disconnect business energy for unpaid bills, but it should be a last resort. They are expected to send reminders, give clear notice and offer a fair chance to discuss payment options before cutting supply, as outlined earlier in this guide.
How much notice should I get before disconnection?
Notice periods vary, but you should usually receive written warning giving at least several days to respond, and often longer. The disconnection notice should show how much you owe, what you need to do and by when, so treat it as urgent and contact the supplier straight away.
What can I do if hidden broker commissions have inflated my bills?
You can ask your supplier and broker to confirm in writing how commission has been charged and how it affects your unit rate and standing charge. If the figures look unreasonable or the commission was not properly disclosed, you can raise a formal complaint and, if you are a microbusiness or small business, may be able to escalate to the Energy Ombudsman or another accredited dispute resolution scheme.
Are there any schemes to help with business energy costs?
Government and industry support schemes change over time, so it is worth checking the latest guidance on GOV.UK and speaking to your supplier about any support they can offer. Some local authorities and trade bodies also provide grants or funding for energy efficiency improvements that can reduce ongoing bills.
Can business energy debt lead to winding up or liquidation?
It can. On its own, energy debt may lead to disconnection or court action. In practice, it often sits alongside rent, business rates and tax arrears, and together these pressures can lead to Creditors’ Voluntary Liquidation or, in some cases, compulsory winding up.
How does business energy debt affect me as a director?
Energy debt is normally a company liability, not a personal one, unless you have signed a personal guarantee or given other security. Even where you are not personally liable, you still have duties as a director. If the company is insolvent, you must put creditors’ interests first and avoid taking on new debts that the business clearly cannot repay.
How We Help Directors Facing Energy Debt
When business energy debt is building and suppliers are talking about disconnection, it can feel as if everything is resting on your shoulders. You might be trying to protect staff, manage other creditors and keep customers happy, all while worrying about whether the lights will stay on.
At Anderson Brookes, we help you step back and look at the whole picture in a calm, structured way. When you contact us, we will:
- Listen carefully to how energy arrears have built up and what other pressures you are facing
- Review your energy contracts alongside rent, business rates, supplier and HMRC debts
- Explain in straightforward terms what suppliers, landlords and other creditors can realistically do
- Help you decide whether the business can be stabilised through informal arrangements or whether a formal route such as Creditors’ Voluntary Liquidation is more appropriate
- Work with you to protect you as a director as far as the law allows, including looking at any personal guarantees or other personal risks
Our role is not to judge you or tell you what you should have done. Our job is to help you understand where you are now and guide you through the options so you can make decisions that feel safe and informed.
Talk to Us About Business Energy Debt and Disconnection
If you are losing sleep over unpaid business energy bills or threats of disconnection, you do not have to face it on your own. A short, confidential conversation with a regulated adviser can help you understand how serious the situation really is, what suppliers are likely to do next and what options you have to protect your business and your own position as a director.
Get in touch by calling 0800 1804 935, emailing advice@andersonbrookes.co.uk, or contacting us online. We will listen, explain your options clearly and help you choose the next step that feels right for you, whether that is negotiating with your supplier, restructuring wider debts or closing the company in an orderly way so you can move forward with a clearer head.
