Businesses Are Missing Key Money-Saving Opportunities Amid The Cost-Crunch

For many SMEs, the rapid inflation in production prices to a record-breaking 18.6% over 12-months is stretching finances thinly. Gripped by the ‘Cost-of-Business’ crisis, many firms have increased their prices, further driving up the inflationary pressures on consumers that risk sparking a recession. To avert this fate, UK businesses must increase efficiency in all aspects of their operations to keep costs under control. While soaring energy prices have driven a focus toward cost-saving opportunities within utility bills, one utility is often left forgotten in these discussions: the water utility bill. 

While water utility costs may make up a smaller proportion of overall running costs compared to the supply of electricity and gas, there exist significant cost-saving opportunities left untapped by many UK businesses in the UK’s water and wastewater retail market, due in part to a general lack of commercial awareness about the market. In a cost crunch, however, UK businesses cannot afford to overlook this any longer. Especially when you consider the recent increases in rates for wholesale water and retail water default rates that might be countered with a wider knowledge. 

The Open Water Retail Market: Dipping Your Toes In

For many UK businesses, the concept of an open water supplier marketplace is unchartered territory. Prior to 2017, the power of choosing your own water supplier was out of the hands of businesses in England, with regulations mandating the exclusive use of local water suppliers. Since deregulation, however, businesses have been free to switch providers or renegotiate their contracts with the support of water utility brokers, creating a newfound opportunity for businesses to secure cost reduction and enhanced services from their water utility supply.  

The Consumer Insight Survey (CIS) 2021 showed that nearly two-thirds (62%) of those who switched experienced lower prices, higher quality service or better customer service as a result of switching water providers. In fact, the vast majority (86%) indicated they received benefits that exceeded expectations. Despite these clear advantages, a general lack of awareness of the retail water market persists, with engagement far below other utility markets; only 9% of all customers in the water market were active in the prior 12-months.

One reason for this disparity in engagement is that post-deregulation, little was done to incentivise utility brokers to engage in the water market. The existing systems for switching customers were highly disjointed, complicated, and slow. Without their engagement, the market lacked the strong advocates needed to raise awareness amongst businesses through the provision of insight and advice. Ultimately, the advent of cost-saving benefits created by an open market is driven by customer engagement; so, if UK businesses failed to participate in the market with the support of water utility brokers, the true potential of this marketplace ran the risk of never being fully realised. 

This was a concern Everflow sought to remedy from the outset by developing tools – such as our instant quoting tool to make switching as cost-effective and straightforward as possible. We were able to better support broker participation in the market as the trusted point of contact for those businesses keen to explore the cost-saving opportunities in switching water suppliers. The growing use of water utility brokers by UK businesses for crucial advisory services is a trend we intend to continue to help drive. 

Water Usage: Increase Efficiency, Secure Savings 

In addition to a lack of commercial awareness of the cost-saving opportunities in switching suppliers in the open water retail market, there also appears to be a wider lack of awareness among the business community around how to tackle water usage inefficiencies that are generating costly waste. This inability to eliminate water usage waste is especially prevalent amongst struggling SMEs of the hon-household market who typically lack the resources of larger businesses to regulate their water usage efficiently. 

One of the biggest initial hurdles to raising awareness amongst UK businesses on how to avoid costly ineffective water usage is their lack of access to smart water metres. Typically, most businesses will only have access to the industry-standard monthly or six-monthly water meter reads which naturally limits people’s ability to identify inefficiency in their water usage. Many businesses choose to have a water logger installed on their water meter to measure the amount of water that passes through daily. Only last month, a logger detected a leaking dual flush mechanism on one of our client’s toilets, which they fixed immediately saving hundreds of pounds on their water bill.

Ultimately, industry bodies and the regulator will need to step up and make smart metering more accessible and affordable for all businesses so that all users can be better positioned to reduce inefficient water usage and secure valuable savings. 

While SMEs are under the greatest pressure to cut costs amid the ‘Cost-of-Business’ crisis, these organisations have far less time and money to dedicate towards the optimisation of their utility usage. In an effort to make it easier and more affordable for all businesses, we recently launched the UK’s first free Business Water Efficiency certification scheme providing participating businesses with reports outlining fully-costed and personalised water efficiency recommendations. 

The reports will include calculations of how much water each business could save and the tangible impact on water bills. Findings have shown potential savings of between 30-70% for customers, which should offer businesses crucial financial support at this time. Through implementing several efficiency recommendations within Everflow, we have been able to reduce our own head office water usage to 28 litres per employee per day – nearly half the national average of 50 litres.

Navigating Choppy Water

Certainly, more must be done to improve wider awareness of commercial water consumption habits, provide practical guides for improving water efficiency, and incentivise wider engagement in the water market. While the cost-saving opportunities contained within the water utility bill, and the wider water industry, remain blighted by a lack of commercial awareness, the present crisis provides an opportunity for the water industry to play a defining role in the minds of businesses. Instead of profiting at their expense, this utility industry has the chance to distinguish itself as a leader in supporting UK businesses to secure vital savings during a time of unprecedented economic turpitude. 

About the author:  Josh Gill is the CEO of Everflow.