If you’ve ever paid a bill by visiting your account on the website of the service (such as paying your Netflix bill on the Netflix website), then you may be annoyed by bills that don’t have a website or app where you can quickly pay as you go. Businesses often acquire bills that can’t be paid over the Internet or via phone, and that means that you’ll have to spend some time filling out and mailing checks at least occasionally.
Or does it? Automatic bill pay services, typically offered by your bank or your accounting software, are services that will either send electronic funds directly to a debtor when the bill is due, or will print out and mail a check to a debtor when the bill is due. There are many reasons why this type of service can save you tons of time and money, which is great for both your business and yourself.
Saving Money with Automatic Bill Pay
1. No More Late Fees
One of the biggest ways that online bill pay services can save you money is by eliminating late fees. You no longer need to remember to pay a bill, because the service will automatically send out payments when they are due. For payments to large companies or debtors that accept electronic payments, these will be sent on the date you set. For mailed payments, most online bill pay services will prompt you to enter the date you wish the payment to be received, and will then mail the check three to five days before that date, to ensure prompt arrival.
2. No More Paper Costs
Perhaps you have a good handle on paying your bills on time, and late fees are never an issue for you. However, you do still have to pay for the cost of the checks, stamps, and envelopes when you mail your payments. For a personal account, this may be just a few dollars. However, for a business that is paying lots of bills every month, this cost can add up over an entire year. Bill pay services will do this for free, or for a very low fee that still represents a major discount on all the paper products you would have needed.
3. Discounts from Your Bank
Bill pay services save your bank money as well. With fewer checks to print and ship to you, you may find that you’ll be able to pay fewer fees associated with your checking account. This minimal savings can still add to your company’s bottom line.
4. Meet Your Budgeting Goals
One great thing about online bill pay is that it usually provides a very good “at a glance” report of your past spending. This can make it easy for you to find out where your money could be better spent, where you need to adjust your budget, or where you may need to cut back on certain items or services.
5. Time is Money
Of course, you can’t forget the hours you would have spent writing and sending all those checks yourself. While your time is better spent earning money for your company, your online bill pay service can be working for you.
Other Benefits of Online Bill Pay
Besides saving you money, there are many other things that online bill pay services can do for your business. With less paperwork and less to worry about, it’s far easier to keep your accounting in order. Online bill pay makes it really easy to separate your personal finances from your business finances, for example, because it’s easy to set up automatic payments for certain bills to be paid from certain accounts.
A major benefit of online bill pay is that it allows you to manage your budget on your own terms, rather than on the terms of your debtors.
For example, let’s consider a common scenario in personal financing: Do you pay your mortgage or rent on the first, your utilities on the 15th, and your Internet bill on the 30th? That’s three days out of the month that you have to remember to make a payment, and what if your income doesn’t align with this schedule? Say you get paid in one monthly payment on the first. By the time the Internet is due on the 30th, you’re probably getting a little tight.
Instead, you can arrange online bill pay to take care of all your bills in one fell swoop when you get paid. Then you can relax the rest of the month, knowing that your money is free to be saved or budgeted as you wish.
Alternatively, you can also arrange automatic bill pay to help you spread out payments if your paycheck won’t cover all the bills that are due on the 1st. You can send off a payment for Bill #1 a week before, and then pay Bill #2 on the day of. Whatever schedule works best for your income is how you can arrange online bill paying to follow.
This example applies just as easily to business accounting. Pay debtors when the revenue is available, on a schedule that works for your business.
Worried About Overdrafts?
One of the biggest reasons that people and businesses avoid online bill pay services is that they are afraid of overdrafts. It’s a valid worry; we’re only human, and it can be easy to forget to deposit money into the account you use for bills when you are used to the automated system doing all the work for you. However, there’s a very easy way to get around this. Every online bill payment service offers email alerts that can be set to notify you before payments are made. Set it to alert you a week before, a day before, or even a couple of hours before, a payment is made, and you’ll have plenty of time to transfer a deposit or halt the payment if necessary.
Make Your CPA Happy
Finally, online bill pay can be an excellent way to keep track of all your expenses. When tax season rolls around and you need to know what you’ve paid out in order to deduct certain business expenses, all you have to do is open your online bill pay service and you have a complete history of dates and amounts paid to every debtor. You’ll also be able to easily track increases in bills, to more easily catch problems as they occur.
With online bill pay services utilizing state-of-the-art safety measures to ensure your privacy, and many offering even more features than payment and report generating, there’s no reason to not jump on the train and find an online bill pay service of your own.