A new report from the business price comparison company, Reducer, shows that low rates of switching will result in UK businesses missing out on £7.6Bn of savings in 2021.
Their analysis indicates SMEs could be saving big on their core business costs. Businesses that purchase services such as energy, card terminals and telecoms, could save an average of £4,922 a year by switching suppliers. Across all UK businesses this amounts to £7.6Bn of potential savings.
Unlike studies that use surveys to ask companies about their spending habits, Reducer had access to the accounting data of over 5,000 businesses. “Our spending report provides an unparalleled level of accuracy and detail, because we analysed the actual invoices of UK businesses.” said Reducer CEO, Joe Gallard.
The scale of the results were no surprise to Gallard who wrote “UK businesses who don’t shop around consistently pay the highest prices. Comparing prices can take just a few minutes and save a business thousands.”
Reducer found the most productive area for reducing costs, with potential savings of £2.4Bn, was card payment processing. Each business taking card payments could save an average of £1,427 a year. Warnings about pricing practices in the market are serious enough that the payment systems regulator is currently investigating the industry.
“The rate at which businesses take payments by card is increasing fast due to Covid, and so are the fees they pay to their terminal providers. Businesses who haven’t compared pricing in the last year can likely save.” said Gallard.
Reducer found that UK businesses could save a total of £1.9B a year by switching their energy provider. Their energy price analysis showed that businesses who are out of contract pay one third more than those that are in contract.
Despite the huge energy savings available, the impact of Coronavirus has prevented many businesses from accessing them. Nigel Tapper from Arcade Kitchens in Ilkley was blocked from switching to two different energy providers. “We’ve always had a good credit rating, but energy suppliers just don’t want to take on new customers at the moment, they see it as risky. It’s frustrating because we couldn’t move to a lower cost supplier”.
Businesses could also be saving over £1B in telecoms, an industry dominated BT who have more than 8 times the market share of their nearest rival, Virgin. This week BT customers announced a class action lawsuit to pursue compensation for historic overcharging.
A lack of switching in other business markets means there are potential annual savings of almost £1B in mobile phone contracts, £561M in waste collection, £130M in water and £708M by using fuel cards.