Member Article

Should you fire your finance manager? UK businesses still losing billions on energy costs

These days we’ve been hearing a lot about households energy costs, OFGEM regulations and the “greedy Bix Six”. Only from time to time, a new report comes out and redirects’ media’s attention to business energy costs. The statistics aren’t pretty…

A number of papers over the past few years unveiled that UK enterprises are falling behind when it comes to making informed energy choices.

UK’s small and medium enterprises spend on energy up to £2.45 billion a year more than necessary. That translates into 3.5 UK businesses potentially paying too much. Energy Efficiency Financing report discovered that in 2013, industrial sector alone was voluntarily parting with £2.2bn due to bad energy management. Hospitality sector was diagnosed to be losing £180 mn per year.

Let’s look at the reasons for this negligence. Choice of the energy provider can have a huge impact on the energy costs and should be the first issue to examine when attempting to reduce spending. Shockingly, one of the reports stated that businesses do not remember their contract renewal date or which energy supplier they use. How it that possible? Could it be that the responsibility for contract management wasn’t clearly defined within the company?

While some companies have dedicated energy managers, at Open Energy Market we often see the energy matters being handed down to general managers or facilities managers. Does it mean that they are to blame? It’s true that the other reasons for inflated energy bills include inefficient technology, equipment and outdated, ignorant approach to facilities management.

Now, in bigger enterprises we don’t usually expect a CFO to go around the building investigating efficiency of the printers. However, the person controlling the finance should provide funds for ongoing efficiency programmes and effective maintenance.

Who then is truly responsible?

To really succeed, it’s time to start treating energy as a cross-departamental issue. Energy saving should be a concern of all employees, and for a good reason - tight profit margins mean that inefficient energy cost control can easily result in job losses. For instance, 34% of hospitality managers said that they would consider reducing staff count as a way to save money in the face of increasing energy costs.

It is a long-term process, which is about more than the feel-good factor after flicking off the switch. In fact, it’s not about an abstract moral obligation or sustainability, even though that’s important too. It’s about money, and UK businesses must treat it as an integral part of finance management and cost-control.

So, should your company’s finance manager be fired for negligence? It might be a better idea to start working together and begin implementing changes right now - before the rising bills will truly force the company to let someone go.

This was posted in Bdaily's Members' News section by Ewa Lewandowska .