More effort is placed on energy efficiency than contract management—and that’s costing you dearly.

Remarkably, more businesses spend large amounts of time and money developing initiatives to become more energy efficient than managing their gas and electricity contract costs.

That’s not to say that efficiency measures are a waste of time, because they’re not. But the ROI is often only averaging 10-20% in the best of well-managed projects. Of course, you’ll also save on consumption.

Lower demand for gas and electricity is feeding through to lower bills, as this graphic from OVO Energy shows, and is also good to save on the use of non-renewable fuel sources to ensure they last longer for all of us.

But the wise business owner is the one that switches their energy contract each year—and the savings made can be huge.

If you’ve never switched your energy provider, you’re paying 70% too much

That’s an attention-grabbing number, but it’s unfortunately a true statistic.

The majority of small businesses simply let their contract renew each year once their renewal letter lands at their desk. Renewal rates usually have increases of 15-20% from your current contract. Allow that to happen for a few years and you’ll see how the savings add up.

Larger businesses that run smart or half-hourly meters usually don’t run into this issue because they either have an in-house purchasing team or a broker helping them.

Businesses that are out of contract, on deemed rates because they’ve moved premises, or those who never switch are all in the same predicament: excruciatingly high tariff rates. It’s unlikely you’ll be notified of such problems, or if you do, it may be buried somewhere in the mail you receive.

However, you can avoid this with a little bit of careful planning.

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Take action to find the cheapest prices

Homeowners are bombarded by TV adverts, messages on their bills and other media to switch and save money on their energy bills. But like businesses, most people never do.

Many believe they are quite happy with the prices they’re paying and their incumbent supplier, or think it’s all too hard to switch. At the end of the day they’re only hurting themselves from inertia by overpaying on what is after all a commodity product.

There’s no loyalty from the energy companies to their customers or differences in the quality of the product purchased, so you should always find the cheapest tariff possible.

The only real decision to make is how long you want your new tariff for. The minimum term for businesses is one year. You can also opt for two-, three- or even five-year fixed rate contracts. The prices are slightly higher for longer terms to cover the risk for the provider.

How to make savings today

The process of to switch from your current gas or electricity tariff to a cheaper one is reasonably straightforward. Here are the steps to take:

1) Find you current contract end date to see how long it is before it expires. You can find the date from your online account, by calling your broker, or your current provider.

2) If it’s within three months of expiring, then you need to terminate the agreement in writing.

3) Search for the lowest prices available. Either use the services of an accredited broker or comparison service to assist you.

4) Simply find the cheapest tariff available and sign the new contract.

5) You’re good to go and your new bills will reflect the reduction in price.

This five-step process doesn’t take long. Perhaps it’s best if you find a good broker that can undertake all the heavy lifting for you. They don’t charge for their services because they get a small commission from the company you switch to, but they will perform everything for you. They’ll also keep a check on when your current contract expires and go through the process again.

Don’t let the energy companies take your money

The majority of people who read this won’t do anything at all. Are you one of them? Is it because you can’t be bothered, think it’s not worth the savings made, or don’t have the time? Or are you one of those companies paying 70% less than the business next door because you took action?

The energy companies don’t want you to switch. If you’re still in doubt, go online or call a broker, then come back to this article and post your savings!

Jason Smith runs the operations at Business Electricity Prices (BEP), helping small and large businesses keep their energy costs low.

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