How Our Bill Validation Works

Industry research consistently shows that approximately 15% of commercial energy invoices contain billing errors. This statistic comes from multiple sources including energy consultancies, Ofgem reports, and our own analysis of thousands of validated invoices.

Why Are Energy Invoices So Error-Prone?

Energy billing is complex. Unlike simple utility bills, commercial energy invoices involve multiple variables that create opportunities for errors:

• Meter Reading Estimates: When actual readings aren't available, suppliers estimate consumption. These estimates are often based on historical data that may not reflect current usage patterns, leading to over or under-billing that compounds over multiple periods.
• Rate Changes: Energy rates change frequently due to wholesale market fluctuations, regulatory changes, and contract renewals. Billing systems don't always apply rate changes correctly, especially for mid-period changes.
• Complex Tariff Structures: Commercial supplies often have multi-rate tariffs (day/night, seasonal, capacity-based). Incorrect allocation of consumption between rate bands is a common error.
• Tax and Levy Miscalculations: VAT rates (5% vs 20%), Climate Change Levy exemptions, and other levies are frequently applied incorrectly. Many businesses qualify for reduced rates but are charged standard rates.
• Contract Migration Issues: When switching suppliers or renewing contracts, data transfer errors can result in incorrect rates, wrong meter identifiers, or missing historical data.
• System and Human Errors: Legacy billing systems, manual data entry, and integration issues between supplier systems create opportunities for calculation errors and data corruption.

Common Error Types We Find

Based on our validation data, these are the most frequently occurring errors:

• Incorrect unit rates applied (not matching contract terms)
• Estimated readings when actual readings were available
• Wrong VAT rate (20% charged instead of qualifying 5% rate)
• Standing charges calculated for wrong number of days
• CCL charged on exempt supplies
• Duplicate charges for the same consumption period
• Arithmetic errors in charge calculations
• Out-of-contract rates applied without notification

Businesses that use our validation service recover an average of £2,400 per year in overcharges. This figure represents the median recovery across all business sizes and energy consumption levels.

How We Calculate Potential Savings

When our system identifies an error, we calculate the financial impact using the following methodology:

• Rate Errors: We multiply the consumption (kWh) by the difference between the charged rate and the correct rate. For recurring errors, we project the annual impact based on typical consumption patterns.
• Tax Errors: For VAT rate errors, we calculate the difference between the charged VAT (typically 20%) and the qualifying rate (5%). This alone can represent 15% of pre-tax charges.
• Standing Charge Errors: We compare the billed standing charge against the correct daily rate multiplied by the actual number of days in the billing period.
• Estimation Errors: When we detect likely over-estimation, we compare the billed consumption against historical patterns and flag the potential variance for investigation.

Recovery Ranges by Business Size

The £2,400 average represents a mix of business sizes. Actual recoveries vary significantly based on energy spend:

What Happens After We Find an Error?

Our validation report provides everything you need to dispute incorrect charges with your supplier:

• Specific invoice line items that failed validation
• The expected correct values based on our calculations
• Reference to the applicable contract terms or regulations
• Calculated financial impact of each error
• Template language for supplier communication

Energy suppliers are required by Ofgem to respond to billing disputes within specific timeframes and must refund any confirmed overcharges, typically with interest.

Every invoice uploaded to our system undergoes over 100 individual validation checks. These checks are organised into five categories, each targeting specific types of billing errors.

Click on any category below to see the specific checks performed: