14 October 2026
Energy prices remain a concern for businesses across the UK. According to Ofgem1, the domestic energy price cap increased by 4% from 1 October 2026, reflecting continued volatility in energy markets. While the domestic price cap does not directly apply to most businesses, rising energy costs can create wider financial pressures across different sectors and supply chains.
The impact varies by industry. Energy-intensive manufacturers, food producers and cold-storage businesses may face significant direct costs, while hospitality, leisure and retail businesses can be affected through higher heating, refrigeration and general operating expenses.
For other businesses, the impact may be less direct, filtering through suppliers, customers, transport costs or reduced consumer spending.
The cash flow challenge
When margins are already tight, rising costs can put additional pressure on cash flow. However, businesses should also consider the money they are waiting to receive from customers.
For example, a business may have £250,000 of outstanding invoices. Although these invoices are assets, the money cannot be used to pay wages, suppliers or rising overheads until customers actually pay.
If a major customer experiences financial difficulties as a result of rising costs and squeezed margins, the impact can quickly move down the supply chain.
Where Trade Credit Insurance can help
This is where Trade Credit Insurance may have a role. It provides protection against certain losses where customers fail to pay due to events such as insolvency or protracted default, helping businesses manage their exposure to customer credit risk.
It will not be appropriate for every business, but rising costs can be a useful prompt to review how much financial risk is being carried through outstanding customer invoices.
Businesses may want to consider:
Who are our largest customers?
How much credit are we extending to them?
How dependent are we on a small number of customers paying on time?
What would happen if a major customer could not pay a significant invoice?
Could we absorb that loss alongside higher operating costs
Looking beyond the energy bill
The effects of rising energy prices can extend well beyond a business's own utility bills. A manufacturer facing higher production costs may put pressure on its suppliers, while a hospitality or food business facing increased overheads may have less flexibility in its margins. This means that potential credit risk can sometimes sit one or two steps away from the original problem.
For businesses, this is a useful reminder to look beyond rising operating costs and consider the money tied up in unpaid invoices. Rather than focusing solely on today's cost pressures, ask:
“What would happen to our business if one of our major customers couldn't pay?”
The answer can help identify whether there is a level of customer credit risk that needs to be better understood or managed.
The bigger picture
Rising energy costs are a reminder that business risks rarely operate in isolation. Changes in costs can affect margins, cash flow and financial resilience, with those pressures potentially passing through supply chains.
For businesses that provide goods or services on credit, understanding customer exposure is an important part of managing risk. Know who owes you money, understand how much you could afford to lose, and consider what would happen if they couldn't pay.
1Source: www.ofgem.gov.uk/press-release/energy-price-cap-will-rise-4-october-2026
This article is provided for general information only and should not be relied upon as advice. The information reflects market conditions and available data at the time of publication, which may change.