Business Utility Contracts - Advice From An Expert

If you're trying to make a positive impact to your company's bottom line, don't forget that you can negotiate your utility contracts. Often overlooked by even the best of businesses, you can create cash flow by negotiating effectively with utility companies. Some things that are really important to remember when you begin to negotiate are (1) that everything is negotiable, (2) that you can average your costs out over the year to stabilize cash flow, and (3) that you need to make sure you do everything in your power to ensure you're utility provider won't cut you off for late payment or something similar.

"Everything is negotiable" is a mantra we always hear in business. This is especially true in utility contracts. Whether you plan on using a lot of energy or a little, you can negotiate your costs, payment structure, and payment terms in almost any way you can imagine. You don't know what the limits are until you ask, and until you start to negotiate your energy or utility purchase terms, you don't know how far you can "bend the rules." Remember that you never get anywhere without asking, and the same goes for asking for extended terms, special payment agreements, reduced rates, or the like.

One way to save money on utility contracts is by negotiating a fixed, regular monthly charge for the services. This can be done by averaging your utility use over the course of the year and then dividing by twelve. By doing so you get an average consumption number, and you can pay the average as opposed to paying on the lows and highs. In other words you won't pay when your utility use spikes, but rather you'll be paying a consistent average throughout the year. This is great way to manage cash flow.

A third thing you want to do is protect yourself from the "lights going out." When negotiating a utility contract you'll want to make sure that if you late pay, you're not going to have the lights turned out. You will want to build into a contract terms that protect you from getting the electricity or other utilities turned off if for some reason you can't pay one month. If you don't do this, or understand what the shut-off terms are, you're going to be losing more than just your shirt in business, because a business can't stay open without the utilities on.

The key to negotiating utility contracts effectively is to remember that almost everything can be negotiated, that you can balance payments out over the year, and that you must - whatever it takes - work to keep the lights on even if you can't make payments on time. Utility providers are like almost any other supplier to your company - you can always negotiate with them. If you remember this and try to negotiate, you will get farther than your competition. You will be working to unlock a source of cash flow that many seem to forget about in business.