The Impact of Direct Debit Adjustments on Business Operations
With energy prices skyrocketing, businesses in the UK and worldwide have been hit hard, particularly when it comes to paying their utility bills. Many businesses rely on direct debit payments for their energy costs, and as these prices soar, companies are seeing significant hikes in their monthly bills—sometimes by 100% or more. This sudden increase can create major headaches, especially for smaller businesses operating on tight margins.
What’s Driving the Increase?
The root cause of these increases is global, with factors like the war in Ukraine disrupting gas supplies, causing energy costs to surge. Wholesale prices have gone through the roof, and these costs trickle down to end-users, including businesses. Even those who were previously on fixed-rate tariffs are finding themselves facing new, much higher variable rates as their contracts expire.
How Direct Debits Have Been Affected
For businesses using direct debits to manage energy payments, the situation has become tricky. Direct debits are meant to smooth out payments, allowing businesses to spread costs evenly over the year. But with prices jumping so dramatically, many businesses are now seeing their direct debits adjusted upwards significantly—often without much warning.
- Surprise Billing: Some businesses have reported direct debit payments doubling almost overnight, making it difficult to plan their cash flow. This has forced some companies to scramble for short-term financing to cover the unexpected cost.
- Refunds and Adjustments: In response to these complaints, energy regulators like Ofgem have stepped in, requiring suppliers to review their direct debit systems. Some businesses that were overcharged have been entitled to refunds, while others have had their payment plans adjusted to reflect actual usage more accurately.
Coping with the Energy Price Surge
Businesses are adopting various strategies to cope. Some are renegotiating contracts, opting for more flexible or capped payment plans to avoid further shocks. Others are looking for ways to cut their energy usage—installing energy-efficient equipment or adjusting operational hours to avoid peak energy costs.
The Role of Direct Debit Bureaus
Direct debit bureaus are stepping in to help businesses better manage these rising costs. By automating the adjustment process and offering clearer breakdowns of charges, they allow companies to have a better understanding of their payments and forecast future costs more accurately. This transparency can help businesses plan, even in uncertain times.
Are you looking for affordable pricing and need help with your payments?
At FastPay, we help a multitude of businesses and organisations take care of their payments. From our Direct Debit Managed service and Powerful Integrations to the FastPay Direct Debit Bureau, we’re committed to providing a payment solution tailored to our client’s needs.
Start a conversation with our friendly team today by calling 0161 737 5290 or get in touch online.
