Understand what you’re trying to achieve

There are many reasons to consider changing your energy deal. You may prioritise cost, you might want to bolster your budget stability, you may not have a clear idea.

Now is the time to consider what you want from your energy deal.

As a rule of thumb, longer-term fixed contracts may look more expensive in the short-term but protect your business from major rises throughout the term.

Shorter-term contracts and flexible deals are for those aiming for the best possible price, potentially at the cost of stability. And savings are not guaranteed.

Be honest about your level of energy expertise

Another early consideration should be about the level of energy expertise within your business.

We get it. We all want to feel like we’ve won. We want to time the market to perfection, cruising from optimal deal to optimal deal. That is possible, but it’s very difficult.

Flexible deals require time, effort and knowledge to make the most of their strengths. If you go for a flexible tariff, you must be prepared to understand the energy industry, what makes prices rise and fall, what charges and costs are involved in your bill and the confidence to pull the trigger on your next energy price.

Fixed deals are low maintenance once they’re up and running. If you’re stretched for time and don’t want to think about your business energy regularly, fixed is usually the safest option.

Consider how much risk you can tolerate

Following on nicely, it’s important to weigh up how much risk your business is willing to tolerate.

You must consider your margin sensitivity. If the next geopolitical event causes major price surges, could your business easily pass increased costs on to your customers?

Weigh up your reserves. Do you have the cash reserves to pay the bills in the event of sudden spikes? If the answer to either question is ‘no’, your business has lower tolerance and should probably consider a fixed rate.

For businesses in a healthy, stable position who could pass on costs to customers or absorb energy shocks, flexible contracts could be a great way to capitalise on market price falls.

Don’t assume the cheapest rate is the best deal

It’s easy to get distracted by headline figures. Yes, securing a competitive unit rate and standing charge are both important, but you need to know what the full package is to determine whether it’s the right deal.

Assess the contract length. Again, longer contracts can sometimes come with higher rates because suppliers are pricing in future uncertainty.

On the surface, you’re paying more than a cheaper flexible deal, but if prices rocket upwards while you’re locked in, you may end up paying less over the course of your contract than flexible customers.

You should also consider customer service. If something goes wrong, can you trust you’ll speak to a helpful team member with your supplier? You need to determine what you would pay for quality customer service.