When it comes to running small to medium-sized (SME) businesses, cash flow is absolutely vital. It is the oil that keeps the cogs of any business moving and few SMEs can endure late payments or capricious monthly billing for too long.
A recent npower Business survey highlights just how important this issue is to UK SME owners – 23 per cent believe stricter payment terms would help their business over the next year.
Energy management is also hugely important to cash flow and that’s why 64 per cent of small businesses have subscribed to a fixed energy contract as a way of managing cash flow. However, only 6 per cent have installed a smart meter to stop estimated bills, with this figure falling to 3 per cent for Automated Meter Readers (AMRs). AMR and smart meters feedback actual energy use to energy suppliers rather than estimated energy use, meaning businesses pay only for what they are actually using at any given period.
AMR and smart meters improve energy management for businesses, which in turn helps promote a healthier cash flow. Importantly, the benefits of better energy management do not stop there: it can result in cost savings of between 5 and 25 per cent per year, according to the Carbon Trust.
We believe there are four areas which hold the key to driving energy use down and cost efficiencies up:
Wastage. If lights, air conditioning, heating and ventilation and other equipment are not required, they should be switched off. Control systems can automatically switch off items like display cabinets when they are not in use.
Lighting. Even small changes such as switching from halogen spotlights to LEDs could save up to 80 per cent of energy used and reduce maintenance costs.
Heating. Heat can easily escape out of the front door or in buildings with large, open entrances. One way to save energy is to install "air curtains" above the entrance. These provide a stream of hot air, keeping the warmth in and the cold out.
Employees. A change in employee behaviour and attitude to energy could also have a real impact. All staff should be encouraged to think about their energy usage.
These are simple ways to create a better energy management framework within businesses. When combined with AMRs or smart meters, businesses will find they not only have an improved cash flow, they also have more cash to manage.
☛ Phil Scholes is SME markets director at npower Business.