Energy Prices Are Cutting a Slice Out Of Small Biz Cash (And It’s Not the Freebie Kind)
Experian’s newest deep‑dive into the finances of 1.16 million small businesses has thrown a very stark fact into the spotlight: one in three could run out of cash when the government’s energy price cap wraps up on March 31. That’s a jump from the current 13 % who are already on the brink.
How the Crunch Was Calculated
Using the Commercial Credit Data Sharing scheme plus fresh data from ONS, Gov.uk, and BusinessView, Experian mapped out each firm’s cash balance, credit, and debit trends. They then slapped an estimated rise in energy costs (from April 2023 onward) onto those balances. The result? A list of businesses that are “at heightened risk” – meaning they may not survive the energy shock.
What This Means for Small Businesses
- Cash Flow Is King. Think of it as your business’s life support – if you’re stretched thin, any spike in bills will take a hit.
- Credit Scores Matter. Understanding when and why your score fluctuates can help you avoid surprise triggers.
- Talk to Suppliers Early. Give energy providers a heads up if you’re bracing for trouble – they’re more willing to work with you than you think.
James McGarva, Managing Director of Experian’s Information Services, summed it up with a practical blow‑to‑the‑head: “The future looks daunting, but there are steps you can take to improve resilience.” So, grab a coffee, pull up that balance sheet, and get moving.
Industry Voices – Because We All Hate Waiting For Money
Liz Barclay, the Small Business Commissioner, declared the data “very worrying.” She pointed out a tough reality: many smaller firms rely on payments from large customers. If those big‑name players hold onto cash for “critical business needs,” the little guys can’t keep up with their energy bills.
“If the energy bills go up again, it could break the business,” Barclay warned. “We need big customers to pay small suppliers as a priority so the little guys have a fighting chance.”
On a silver lining note, Experian noted that “invoice payments overdue by 30 days have shrunk by 11%,” though retail, accommodation, and food sectors are still in a rough patch.
Equipping Small Businesses for the Shocks Ahead
Experian is rolling out tools to help owners bounce back:
- Credit Review Service. Clean up your credit score in a snap and keep tabs on your financial resilience.
- Affordability Assessments. Spot struggling suppliers early, so you can act before the stress compound.
- Delphi for New Business. A wry guide for lenders to make thoughtful, responsible decisions.
In short, the energy cap ending isn’t just a line item in the budget – it’s a warning bell. But with sharp cash management, a clear understanding of credit dynamics, and the right tools in hand, small businesses can keep their lights on and their spirits high.
