Automatic Bill Payments vs Manual Bill Payments

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Paying bills is an important part of running a small business. Regardless of what industry you’re in, it’s likely that you have a lot of different bills to pay. Internet, electricity, water and rent all add up and the amount of bills payable on a monthly basis can become overwhelming.

Using an automatic bill payment service or system, like Lejjer’s Bill Pay service, can help you easily pay bills every month. But what are the benefits of automatic bill payments and how does it compare to manual bill payments?

Both manual and automatic payments can be useful for your business depending on the situation, by following some guidelines regarding payments, you can make the best use of both methods.

What Is Automatic Bill Pay?

Automatic bill pay is simply a payment method for your bills that allows you to automate bill payments every month. With automatic bill pay, all your monthly business bills can be paid automatically through online banking software.

With the bill pay method, your bills are automatically paid through an online banking transfer which you authorize from your account. You have both the authority and responsibility to decide whether a payment should automatically go off your account each month. If you cancel a service, resulting in a situation where one of your bills are no longer payable, you have the responsibility to see to it that the automatic monthly payment from your account is cancelled for that bill.

Autopay vs Bill Pay

Autopay is another payment method that is similar to bill pay, however, the two shouldn’t be confused.

With autopay, you set up payments with a vendor by providing them with your necessary banking details. When using the autopay method, the vendor will be responsible for subtracting payments from your account for all your bills with them. The benefit of this payment method is that it shifts the responsibility of paying bills from you to the vendor you’re buying from, as unpaid bills will be a result of their negligence, not yours.

However, this method isn’t ideal, as the vendor will have access to your bank account to subtract money. The vendor won’t have restricted access to subtract a fixed amount of money from your account to cover the agreed upon bill. Instead, the vendor will have full access to subtract money from your account.

Quite often, this leads to situations where vendors accidentally (and rarely even intentionally) subtract money you don’t owe. While there are laws protecting consumers from fraud, losing any amount of control over money in your bank account is risky, even if only a little. If a payment dispute arises between yourself and the vendor, the amount they overcharged you might not be enough to warrant legal action, which means you’ll have to write it off the money they took as a lost cause.

Bill Pay Is Better

Because bill pay gives you control over your money, it’s better than autopay, where a vendor will have access to your account. However, the downside of bill pay is that payment for all bills will be your responsibility and you’ll need to keep proper tack of your finances to ensure that bills are being paid and the right amount of money is being transferred from your account each month.

The Old Way of Paying Bills Manually

In the old days – before the internet and online banking, staying on top of paying bills was more difficult, time-consuming and troublesome than today. The most common way people would pay their bills was by sending a cheque in the mail.

Every month, a business owner would have to sit down to look at all their business-related bills (which they normally also received in the mail). After that, they needed to write out a cheque for every bill that was payable for the month, which they had to send via mail to each individual vendor they were owing.

There are a lot of downsides to the old way of paying bills. Misspelling the vendor postal address or putting the wrong cheque in the wrong envelope, could lead to bills not getting paid. Cheques bouncing were also a common problem, as there was no instant way to inform business owners their cheque had bounced, it wasn’t uncommon for business owners only to find out a cheque had bounced quite a while after paying a bill.

Apart from human error on the side of the business owner or a company’s financial department, the risk of a cheque getting lost or stolen in the mail also existed. While this mostly wasn’t an issue, it was a concern to many people when paying very large bills. As a result, some business owners also chose to pay bills at payment offices, meaning they had to stand in a line and wait to pay bills.

Modern Manual Bill Payments

Paying bills via cheques in the mail is still an option, but it’s unsurprising that business owners nowadays aren’t interested in the old bill payment method. It’s just too tedious, risky and cumbersome.

Though manual bill payments aren’t as difficult and time-consuming anymore, they still exist. As everything else in life now, however, manual bill payments are done electronically.

Nowadays, a manual bill payment refers to any bill you’re not paying through automated online banking software. The process of paying your bill manually every month involves logging onto your banking software, choosing the vendor you owe money as a beneficiary and transferring the required amount to them.

This method is simple enough, and the online banking service you use to pay bills should be available 24/7, making it accessible and convenient too.

However, there are downsides to paying bills manually. One of the biggest issues with manual payments is that you’ll need to remember what bills you have to pay each month and regularly set aside time to ensure all your payments are up to date.

Unlike automatic bill pay, the money you owe for bills won’t be automatically transferred from your account each month, placing the responsibility of an extra task on your shoulders.

Automatic Bill Pay vs Manual Payments: Which Is Better?

Choosing between bill pay and manual payments is a personal choice and the best option can differ from one business to another, or even from one bill to another.

Automatic bill payments that are done by setting up a monthly payment via your online banking are limited, as they only work for recurring bills with fixed amounts. Only payments for a fixed amount on a fixed day of the month every month can be made via bill pay. Any bill that fluctuates from month-to-month will still have to be paid manually.

Setting up monthly payments can also cause business owners to become too complacent with their finances. This leaves room for errors, such as unpaid bills (should the automatic payment for whatever reason not go through) or double payments from bills accidentally being paid both manually and automatically. While these things are rare, they can happen and business owners should still take time each month to review their finances and keep track of bills to ensure they’re paid appropriately.

Another disadvantage of automatic bill payments is that they go off your account every month, regardless of how much money you have in the bank. If you don’t keep track of the cashflow in your account, this could lead to an overdraft.

While of the disadvantages of automatic bill pay seems to make manual payments a more attractive option, manual bill payments come with their own set of disadvantages – the main one being that bill payments can sometimes slip through the cracks, leading unpaid bills that negatively affect your business credit.

When weighing up the options, it’s always best to use automatic bill pay when possible, to save time and ensure regular bills are paid without fail.

The important thing when using both automatic bill pay or manual payment methods is to keep track of your business finances. Sometimes even the amount for a regular bill can change due to a vendor service fee increase or because you cut back the services you receive from a vendor. In these cases, your bill pay will have to be updated to reflect the new amount so you won’t still be paying the vendor the old amount.

Bill Pay Services

Bill pay services involve using an accounting firm or business bookkeeping company to keep track of your business finances and pay bills each month. By using professional services, both regular bills and bills that fluctuate can be paid monthly so that your business can maintain a good credit and all bills are handled professionally.

At Lejjer, we offer bill pay and accounting services for small businesses in Miami. If you’re interested in simplifying the financial responsibility of running your business, talk to us and we’ll work together on running your business finances in the most professional, responsible and sustainable way moving forward.

Rozanne WildsAutomatic Bill Payments vs Manual Bill Payments

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