Discounts for different payment methods

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Energy bill discounts for different payment methods

Energy suppliers offer a variety of payment methods for both domestic and business customers - a number of these occasionally include a discount, while others may incur a premium. Choosing the right payment method for your business can save you money and make it easier to manage your energy bills.

The following are some of the most common payment methods – and any associated discounts – available to business customers when it comes to paying their electricity and gas bills.

Monthly direct debit

A monthly direct debit is possibly the simplest way of paying your business bills. Setting up a monthly direct debit with your supplier allows a set amount of money to be automatically taken out of your account and paid to your supplier each month.

In order to calculate this amount, your supplier will estimate how much you’re likely to spend on energy in the coming year by considering your previous usage and your current unit rate and standing charge. Your annual spend is then divided into equal monthly instalments which you can arrange to be taken out of your account on a specific day.

Why choose monthly direct debit?

Budgeting is easier as you’ll always know how much will be taken out of your account - and when this is scheduled to happen. As payments happen automatically, you need to spend less time managing your bill, and your supplier is assured that they will always receive payment from you. In fact, you may find that some suppliers insist upon their business customers using direct debit for payment. Some suppliers may also offer a wider range of choices and prices for customers who are willing to pay by direct debit.

Discount offered: Between 4-8% off your energy bill. Suppliers usually offer their largest payment discount for customers that pay by direct debit. The discount is applied before VAT and CCL have been added - but before any other discounts have been deducted.

Quarterly direct debit

A quarterly direct debit is similar to a monthly direct debit except your payments are made every three months. You’ll find that most business energy suppliers ask their customers to choose monthly direct debit as their method of payment. When suppliers do offer the option of quarterly direct debit, this is often subject to certain requirements – such as being a high energy user – and may come with a premium.

Discount offered: Between 0-2% off your energy bill.

Premium applied: Some quarterly direct debits are subject to a 5% surcharge.

Potential to overpay or underpay

You may have observed that your business uses significantly more energy over the winter than during the summer months. As such, paying the same amount each month – or every three months – through a pre-set direct debit means you could risk overpaying or underpaying for your usage in certain months.

Regularly overpaying means you’ll build up credit in your account while regularly underpaying means you’ll build up debt with your supplier. The balance on your bill will need to be settled at the end of the year, which either means you’ll need to settle your debt in full, or you’ll need to ensure your supplier pays you the amount owing. To avoid either of these situations, try to submit meter readings to your supplier on a regular basis, so they can adjust your direct debit payments accordingly. This is also known as a variable direct debit, explained below.

Variable direct debit

A variable direct debit requires customers to submit meter readings on a regular basis so their supplier can adjust the amount that is to be taken out of their account each month – or every three months. You can submit your meter readings online or over the phone.

Typically, your supplier will send you your adjusted bill and allow a few days for you to check it is accurate before automatically taking the amount from your account.

Why choose variable direct debit? A variable direct debit allows you the same convenience of a monthly direct debit as you won’t have to take additional steps to pay your bill when it arrives. However, a variable direct debit does mean that the amount you pay will vary each month or each quarter, and you may pay more during the colder months.

Discount offered: None.

Cash or cheque payments

If you are unable or unwilling to pay by direct debit, it can be difficult to find a supplier that is willing to offer a free or discounted alternative for business customers. Allowing payment by cash or cheque is comparatively more risky for suppliers as the method does not guarantee payment.

For cash and cheque payments, suppliers either charge a premium or charge a monthly lump sum to cover the collection and administration costs they incur to process the payments. Some suppliers consider cash or cheque payments on a case-by-case basis, so it’s always worth asking your supplier to consider this method for your business.

You can use the Post Office to pay by cash or cheque, although it can take at least three working days for payment to reach your energy account. Alternatively, you can use your local PayPoint or PayZone outlet, although it can take around two working days for payment to be processed.

Discount offered: None.

Premium applied: either 2-5% surcharge or additional monthly fee (around £25) .

Payment on receipt of bill

Some suppliers offer a discount to customers who can pay promptly – within fourteen working days – on receipt of their bill. There are a variety of payment methods you can use, including telephone or online bank transfer, direct bank transfer, or paying through your online energy account. You can also pay using your debit or credit card, with suppliers often using an automated 24-hour telephone service to process your payment.

Discount offered: 0-2% off your energy bill.

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