From XU Magazine, 
Online News

Business spending and supplier review 2022

February 4, 2022

This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
You can find the original post here:

We’ve just released the Reducer business spending and supplier review for 2022. We looked at the accounting data of 6,273 businesses we worked with over the last year to understand where businesses are buying services and how much they pay.

Spending trends for businesses in 2021

In 2021 UK businesses spent £44B on gas, electricity, mobile phone contracts, water, card payment processing, telecoms, waste collection and fuel. This was down from £53B in 2020. About half of this reduction was due to business closures and the other half was down to businesses moving their operations to domestic settings (i.e. people working from home).

We saw a significant reduction in card payment processing costs as more shopping is done online. Unfortunately for high street businesses, the flip slide of these lower costs has been much lower volumes of sales. Businesses also spent less on telecoms, water and waste collection as companies partially or completely closed sites.

The only areas which saw greater levels of spending were gas, electricity and fuel, which all saw significant price increases in 2021.

UK businesses spend £44Bn each year on eight key services
UK businesses spend £44Bn each year on eight key services

The second half of 2021 saw a full blown energy crisis, as the wholesale price of natural gas soared by 300%. In the same period we found that the price of new electricity contracts increased by 50%.

Wholesale gas prices increased sharply in the second half of 2021
Wholesale gas prices increased sharply in the second half of 2021

Significant price increases were also seen at petrol pumps through 2021, with the average price per litre of fuel jumping more than 25% over the course of the year.

Fuel prices increased significantly through 2021
Fuel prices increased significantly through 2021

Overall 2021 was an extremely difficult year for many businesses, especially those with brick and mortar premises who have energy contracts and depend on the haulage industry for goods.

Top savings for businesses in 2022

The good news is that businesses can still find large savings on their core services if they shop around. For a business that spends in all eight areas Reducer quote on, we found average savings of £4,738.

Average business savings of £4,738
A business buying eight key services could save an average of £4,738 each year

“Businesses can save an average of £1,692 per year by switching their energy provider” said Reducer CEO, Joe Gallard “but they should also review their spending on card payment processing, mobile phone contracts, broadband and waste collection, as businesses can expect average annual savings of over £2,000 on those services if they shop around”.

Taking into consideration that not every UK business buys these services, we found that the average UK business would save £1,124 by using Reducer. If every business in the UK used Reducer we would find them a total saving of £6.3B.

Cumulative savings of £6.3 billion
UK businesses could save £6.3Bn every year by switching suppliers

As we head into 2022, it is perhaps more important than ever that businesses review their contracts to make smarter spending decisions.

As well as switching suppliers for better prices, businesses should consider auditing their core spend to ensure that the services they pay for are in line with their business. For example, most businesses we work with have hidden costs on the phone bills, such as unused call packages. By switching to a different contract, either with the same provider or elsewhere, these businesses could find savings without impacting the service they provide. Monitoring usage and comparing suppliers helps to ensure that businesses are being wise with their funds. In light of a number of crises in 2021, including the continuation of the pandemic and the full force of the energy crisis, businesses can prepare for shake ups by trimming their spending to what is necessary.

Why leave it there?

To find out more about Reducer

Straight to your inbox

Subscribe to our newsletter for updates as they happen
We hate spam too. We NEVER sell our mailing list.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.