I’m trying to reduce the time I spend handling financial matters, and am considering paying a lot of my bills automatically. This is something I’ve always been a bit wary of, but can you talk me through the ways this can be done and the issues I’ll need to consider?
Automatic payments is a great example of the two-edged sword that can emerge for small businesses when they embrace new technologies as they become more widely available.
Prior to automatic or online payments being commonplace, everyone received their bills in the mail and made payments using a traditional method, often visiting the supplier with cash or sending a cheque in the mail. While this approach served us well for decades, many people have found they can save a lot of time and money by automating their bill payments instead.
Automatic payments can be done many ways, with the simplest being direct debit – allowing your bank account or credit card to be automatically debited for the amount of the bill on the due date.
Automating bill payments can bring many benefits, including:
- Never having to organise payment of the recurring bill beyond the first payment
- Avoiding late charges on recurring payments, and
- Potential additional price reductions by agreeing to a direct debit setup. Direct debit saves your suppliers money as well, as administrative tasks can be more automated using this process
While the above benefits may seem small, once you apply them to all your bills including council rates, utilities, insurances or credit card balances, the time savings really do add up.
Even though there can be significant benefits to automatic payments, there can be downsides, including having to always ensure you have sufficient cash to avoid issues with payments. If you can’t build up a minimum amount of cash and/or don’t have the discipline to avoid spending cash put aside, automatic payments could be difficult for you to manage.
You’ll still need to review your invoices to make sure you’re not being overcharged. If you switch to email invoices, you can review them before the payments come out of your account. You should still review your costs regularly to ensure you’re getting a good deal. And you should check your direct debits to ensure you’re still using what you’re being charged for. Gym memberships are a great example of “set and forget”.
If you can avoid the potential pitfalls then automatic payments can save you and your businesses a lot of time and, often, money.