How to lower your phone bill with VoIP

A business man wearing a headset makes a VOIP call

Voice over internet protocol (VoIP) telephone systems - also known as IP phone systems - are a kind of business telephone system where calls are made over the internet instead of using traditional phone lines. Using VoIP business phone systems can be cheaper and more flexible than a traditional business phone line

In this guide, we describe how VoIP phone systems work and how they can help save you money on your business phone bills.

How does VoIP work?

VoIP business phone systems allow you to place the calls you would normally make over a traditional phone line over the internet instead. To do so, you will need a reliable internet connection and a VoIP-enabled telephone handset.

The handset or headset converts your voice into a digital signal which can be transferred across the internet.

You will also need a VoIP/IP telephony provider to set your business VoIP phone system up for you. This usually involves a one-off set up charge, then a monthly charge for your business VoIP number.

If you decide to use a VoIP system for your business, you can still call normal phone numbers. And people using normal mobile or landlines can still call you. You get a standard telephone number, just like everyone else.

Why use VoIP?

Companies are usually first attracted to VoIP by the prospect of reducing costs. All calls made within a VoIP network are usually free. That means you can place internal calls for nothing. And you usually pay nothing for external calls to other VoIP users on the same network as you.

Calling regular telephones can also be cheaper with VoIP. Savings are usually greatest when you make international calls.

Nathan Rand of says, "Switching your communication network to a VoIP phone service is a wise move. Its functionality will help you reduce your phone bills and improve your interaction with customers and remote teams (if you have one.)

"Today, with the help of VoIP services, companies of any size - from the smallest start up to the largest enterprise - can cut the cost of hardware, national and international calling, and IT staff. So, you just need to find a VoIP provider that meets your needs in terms of plan and functionality. Positive customer feedback, like these Nextiva reviews are helpful when shortlisting VOIP providers."

VoIP phone systems are also very flexible. People in your business can use 'softphones', which allow them to plug a handset in anywhere and make calls from their main business number. All they need is an internet connection.

Many VoIP telephone systems for business also offer smartphone apps that enable employees to use their own devices as 'softphones', at no extra charge.

If you are suing a VoIP phone system, you can dial from your office number, even if your office is in London but you're currently in Glasgow.

The same is true for receiving calls. With a softphone, calls come to you, wherever you are. Callers don't need to know your location. You can even redirect your number to another telephone – such as your mobile or an overseas phone number.

As well as everyday business calling, VoIP can form an important part of your disaster recovery plan. Because you can redirect calls at will, you can keep on using your usual phone numbers, even if there's a situation that renders your company HQ out of action. All you need is an alternative location with an internet connection.

When comparing telephone systems for small businesses, VoIP systems are usually cheaper and more flexible than other options.

VoIP phone system options

If you are considering a VoIP system for your small business, there are two main types of VoIP to choose from:

  1. Direct VoIP services create a connection across the internet between two people. Skype and Vonage are good examples. Direct VoIP telephone systems often works out much cheaper than using a normal phone line for international calls, but usually involves placing a call via a headset connected to a computer.
  2. Integrated VoIP services allow people in your company to place VoIP calls using a telephone handset which routes calls across the internet. This means your staff don't have to learn a new way of doing things, because it's just like using any other telephone. Integrated VoIP services also include functions like voicemail.

Physical or hosted VoIP?

Most business choose to use integrated VoIP services. There are two options:

  1. With a physical switchboard. This type of VoIP service involves installing a switchboard at your premises. Physical switchboards cost money to buy and maintain.
  2. With a hosted switchboard (recommended). This type of VoIP service is sometimes called hosted VoIP. The physical switchboard is replaced by software running on a server, which is usually located off your premises and maintained by another company.

With hosted VoIP phone system, you plug your phones into your computer network. When you make a call your voice a transmitted through your internet connection. This means you don't need any phone lines (reducing line rental costs), but you do need a fast broadband connection for it to work effectively. Slow or intermittent internet connections can cause calls to drop out which can be frustrating.

VoIP system costs

Because hosted business VoIP systems rely on software running on a server they are more flexible than physical switchboard and offer a greater variety of services. Because the server is managed externally, it’s always up to date and your VoIP supplier will take care of maintenance.

Setting up a hosted VoIP phone system is usually cheaper and easier than installing a physical switchboard too. However, it is dependent on having a good internet connection. If that goes down, so does your business telephone system.

In either case, the cost of individual calls is decided by your service provider. If you have a physical switchboard, then they may be paid to a telephone company like BT. If you run a hosted VoIP system, you pay all charges to the company which provides the system.

It's often hard to work out exactly how much line rental and call charges will cost you. Look for a company with a clear pricing policy and structure and compare offers before making your decision.

If you opt for hosted VoIP, you should be able to call people who are on the same network for free. This can translate into big savings if your business makes a lot of inter-office calls.

What does the * mean?

If a link has a * this means it is an affiliate link. To find out more, see our FAQs.