Usually, if you have a recurring bill to pay, for example, the electric bill, you may at times lose track of the schedule, which may then translate into defaulted payment. Due to the sensitivity of other measures such as wages, you may decide to have your banker directly paying for these expenses in an arrangement you make to have a predetermined amount to be deducted from your account to service these bills at predetermined times. This is what is referred to as the automation of bills to pay. The measure of payment can then be said to be a scheduled money transfer aimed at meeting a specific recurrent bill at a specified time. Since the payments are made to vendors, your bank, mutual fund, or broker would remit the salary on your behalf.
Fundamentals of the Bill of Payment Automation
Automation of bill of payments is not whatsoever limited to bills. This great means of payment is applicable on; installment loans, electric bills, water bills, car and auto loans, credit card debts, mortgage, cable bills, house lease, premise rent, salary, and wages, etc. Automation is usually initiated from the checking account.
The bank or broker holding the checking account enacts on your request to be sent an exact amount of money to the account stipulated on an agreed date of each month. Since some bills will keep varying, for example, the electric bill, it is the work of the vending company to charge the checking account the exact amount of money owed for the company to initiate the bill payment process then. After the account payable has claimed the debt, the broker will then get a go-ahead from the account owner to pay the bill since all the information necessary for payment lies with the owner.
What You Need to Consider Before You Automate Your Bills:
- Determine the affordability of the process.
Before you set up to automate the payment process in your life. You have to stand and check if your account is well cushioned to hold such a responsibility. Since some boils keep on fluctuating, you need to maintain your account balance at healthy levels to prevent the bills from bouncing once the vendor has initiated their payment, and you have no idea. Therefore, before you automate all your finances, think about ensuring that all the bills can feed off the checking account without any problems.
- Merge as may bills as you can on your credit card.
If you want to have your bills separated and you fancy using your credit card to automate them, then it is advisable to heap as many measures on one credit card as you can so that you can pay them once at the end of the month. This saves you money from the extra interest that would instead be charged on other credit cards. It also allows you to earn bonus points from the map.
- Create a checking account for bills.
Usually, some measures cannot be charged on the credit cards. They include rent, wages, etc. for this reason, you should consider creating a checking account with your banker for bill automation. A checking account can be defined as a deposit and withdrawal account, which is held by a financial institution such as a bank for the customer. The report allows the customer to deposit and withdraw. They can be further acceded by ATM machines, cheques, electronic debits, etc.
- Date optimization for all the bills.
After you are sure that bill automation is the way to go, try to optimize the due dates for the entire bill to coincide with your cash flow. For instance, if your pay is deposited on the last day of the month and the rent is paid say on the mid-month, you might want to streamline this date to the first week of the month so that it is not due when your accounts are empty. Also, if your utility bills are arranged such that they are due when your pay is deposited, you might want to move it to at least two days apart to ensure the salary has been cleared.
- This serves to ensure your bills do not bounce.
Link accounts to your checking account. After you ensure that your accounts are aligned with your cash flow, you should then link your checking accounts to your accounts by visiting your bank site log into your company site and link the two accounts. Alternatively, you can use your company site to access your bank account and link them and then checking the bills as recurring. Then leave the bank to make the regular payments on your behalf without a hassle.
There Are Three Primary Ways You Can Use to Automate Your Bills. They Are Highlighted Below:
- Using your bank
Your bank gives you varied options on how you can quickly pay your bills. Firstly, you can furnish the bank with a list of all your bills and dates of payment and leave them to make the payment on your behalf. They will take money from your account to pay your creditors. Secondly, since some bills vary, you can use the bank’s online payment system to move money from your savings account to a checking account where the invoices are paid.
- Permitting the creditors
This is done by providing your creditors with your banking information so that you authorize withdrawals and payments of the existing bills.
- Using credit cards
As indicated earlier, you can use your credit card to pay the fixed recurrent bills such as cable bills, etc. you need to provide the credit card company with your monthly bills so they can make the payments on your behalf.
Advantages of Automating Bills:
- It helps avoid late payments.
- Timely payment improves your credit score.
- It is easy to follow up.
- Automating bills saves you time.
- Disadvantages of automating
- Payments are likely to bounce if you don’t put a cushion in the checking accounts
- You may not catch fraudulent bills
- Automatic payments are difficult to cancel
The Bottom Line
As discussed above, the automated bill payment system is an electronic system that involves the creditors, your financial institution, and you. In the meantime, quick cash in Singapore to learn about loan providers. In this system, you authorize your financial institution to make a scheduled payment to the creditors in settlement of the existing bills, which range from rent, utility bills, loan installments, etc. It has been clearly outlined that irrespective of its convenience, it also has some downsides which you have to consider before exploiting this fantastic system.
paying bill online – DepositPhotos