Bill Paying

Updated November 24, 2007

Paying bills is probably one of the least fun things you do, but it must be done. Most of the time you get a bill, fill out a check, mail it back, and you're done, but for new bill payers or just anyone who needs a few tips to keep things paid on time, here's a few things to remember.

• Use your calendar.
  Write down when a bill is due and how much it is on your monthly calendar. If rent is always due on the first of each month, write "RENT DUE $800" on the first day of each month on your calendar. If you don't know the due date of a bill until you receive it, write it down as soon as you get the bill. If you know that a bill is due sometime during the last two weeks of every month, write down the bill information on the first Monday of those two weeks and assume that's the due date until the bill comes in and you can get a more specific date. When you pay your bill, you can draw a line through the notice on your calendar. If you notice a bill hasn't been crossed off, you'll know that it probably hasn't been paid and you can take care of it before it becomes past due. (Call the company if you don't get your bill, notice that you haven't crossed off the bill but think you may have paid it, or need to know how much to pay. Don't assume that if you don't get a bill that you don't owe anything.)
• Open your bills immediately.
  I know lots of people put their bills in a pile and wait until payday before they even think about opening them, but this is a terrible habit. Open your bills as soon as you get them. Look over your charges and verify that everything is correct.
• Handle your discrepancies immediately.
  So, you opened your credit card statement and discovered that you were charged $30 for a club membership you didn't order, or your phone bill has a two hour phone call to Portugal that you know you didn't make. Call the company that billed you immediately. Don't look at it, make a disgusted face, and leave it off to the side to deal with next week. There are sometimes time limits when it comes to solving such problems, and you don't want to let those deadlines lapse. Another thing to consider is that if the charge was made fraudulently, such as if your credit card number was stolen or someone got a hold of your calling card, you'll want to make sure that all charges to the account are stopped before it gets any worse.
• Set up a system for paying bills on time.
  Studies show that people who pay their bills immediately after opening them are less likely to have late payments (obviously) and errors, but not everybody can do that, so here are some payment ideas to help you get those payments out on time.
  • Have the funds automatically electronically transferred from your bank account to the recipient's account when the bill is due via a bill pay service.
  • Have the funds manually electronically transferred from your bank account to the recipient's account at your own discretion (not an automatic transfer) via a bill pay service.
  • Pay the bill by check or money order immediately after you open it.
  • Write your check or money order, put it in the envelope, and write the date you need to mail it out (not the due date) on back of the payment envelope. Mail it out any time prior to that date.
  • Divide bills into two or three groups based on the date you need to mail them out. Then write all the checks and mail out all bills in each group at the same time.
  • Pay all your bills once a week.
  • Pay all your bills once a month. (This is difficult if your due dates are scattered throughout the month.)
• Keep records of your payments.
  A mistake I often see is a lack of record keeping when it comes to paying bills. Use checks or electronic payments whenever possible rather than money orders. There's no way to know who cashed your money order or if it was cashed at all unless you get a tracking number for it. If you use a check, make sure you write down the check number on your invoice as well as the date you mailed out your payment; plus you need to write down the check number and payee information in your checkbook register (or whatever method of recording transactions you are using). Electronic payments are easiest to keep track of because the bank should have an accurate record of to whom and when an item was paid, and it's easily downloaded into your financial software, but you should still make a note of when you put in the order for the payment to be made and how much you authorized if you don't have means of creating an immediate record of the transaction (such as if you do it over the phone).
• A note about electronic payments.
  I discourage using an automatic payment plan set up through the company you need to pay unless you absolutely trust the company. Lots of utility companies and credit card companies are trying to convince their customers to set up automatic payments, but the problem with this is that when you agree to these automatic payments, you're allowing the company to simply withdraw money from your account, so even if you want to dispute a charge they end up with your money during the dispute and you must endure without your hard earned cash until the problem is settled. Instead use the bill paying service offered through your bank or a trusted third party bill paying service if your bank's fees are too high. With such services, you can schedule money to be taken from your account and given to the company you wish to pay. You can schedule it to happen automatically on specific days of the month or manually.