Businesses can save by paying at the keyboard

Is your nursery still writing out and mailing checks to pay your bills? If so, you’re missing out on significant savings in both time and money. Your bank would like you to handle accounts payable electronically — and they’re making it easy and profitable for you to do so.
 
Change doesn’t come easily to many of us, especially when it comes to how we handle our money. Fears about the security of paperless transactions caused many business people to be wary of online banking. However, all that is changing now. With the latest raise to 44 cents in postage cost for each check mailed (Some experts predict a 50-cent cost on the horizon) plus the cost of buying checks, the savings in money and time is proving to be an irresistible lure to computer-savvy business owners.
 
According to Forrester Research, the number of U.S. households paying bills online will grow from 48 million in 2009 to 63 million by 2014.
 
Service providers now offer a wide variety of easy-to-use systems to pick from, and experts say that security is a minor concern. “Online bill payment is at least as secure as conventional payment [paper checks],” said Elizabeth Robertson, senior analyst at the TowerGroup research firm.
 
“Paying bills online is a real timesaver for me,” said small-business owner Laura White. “I save from two to three hours a month since I started paying my bills online.”
 

Paying electronically is quick and easy
Improvements in technology and user-friendly Web sites make online bill paying almost as easy as logging on to check your e-mail. If you’d like to cut down on the amount of paper you’re handling, there are systems that allow you to eliminate receiving paper bills in the mail in favor of viewable online bills. If you’re really lazy, you may sign up for a system to pay recurring bills, such as utility and office rent, that requires no action on your part except making the proper entries in your checkbook.
 

How does it work?
There are three basic types of electronic bill-paying systems:

1. Individual creditors that allow you to pay only their bills by logging on to their individual Web sites.
2. Banks and other financial institutions as well as third-party services (aggregators) that allow you to pay all of your bills from one Web site.
3. Signing up with individual creditors to deduct payments automatically from your checking account. Technically, this isn’t online bill paying since you don’t have to own a computer to take advantage of it. These automatic payments, used by many utilities and some credit card companies, are arguably the easiest and most convenient form of electronic bill paying.

When you sign up for the automatic deduction service, you get your monthly bills in the mail as before, but you don’t have to do anything except notate the deduction in your check register.
 
Each bill is notated with the exact date on which the payment deduction will be made, usually two to three weeks in advance. That allows plenty of time to contact customer service if there are any questions about the bill. Most providers do not charge for this service.
 
Ask your local utilities’ customer service department if they offer bill paying through automatic deductions.

Using a creditor’s site
Paying online at a creditor’s Web site is the preference of those who like the feeling of control when they are ready to pay a bill.
 
Enter the password assigned when you sign up and you will see a screen showing your current balance. From there, the system leads you comfortably through the process of paying your bill. A few clicks of your mouse and the system zaps a payment that is electronically deducted from your checking account.
 
To keep your own records in balance, you enter the transaction in your check register just as if you had written a check.
 
While the need to log on to each creditor’s site is considered a nuisance by some, the convenience of having a payment credited immediately, or at least within one day, is an important advantage to others.

One-stop shopping
Of course, logging on to the individual site of each creditor to pay bills can be time-consuming. That’s why the convenience of paying everything from utilities, to credit card bills, to suppliers from one site is a major attraction.
 
Banks and other financial institutions, brokerage houses and third-party service providers are competing to sign you up for what many consumers consider the most convenient form of online bill paying.
 
While some service providers limit payees to larger creditors such as credit card issuers, department stores and utilities, others enable you to pay virtually anyone with a U.S mailing address.
 
Most bank Web sites ask you to create a list of payees, including names and mailing addresses. Once you create your list, you may add or delete names.
 
To pay a bill, simply click on the proper payee and enter the amount to be paid. A verification screen then pops up allowing you to review the transaction you have authorized. Once you’re satisfied that all is correct, a mouse click sends your payment on its way.
 
Your payment may not be dispatched instantaneously. Unlike individual creditors with online bill-paying Web sites, many single-site providers actually create and mail a paper check to any payees not set up to accept electronic payments. In those cases, you must allow up to a week for the U.S. Postal Service to deliver your payment.

Online bill-paying companies
At least two third-party companies (aggregators) are also competing for your business. Unlike most banks that offer the service free for their own customers, aggregators charge a monthly fee for their electronic bill-paying service. Companies like PayTrust.com and Fiserv charge between $5 and $15 per month for their service, depending on the features chosen.
 
Judy DeRango Wicks, vice president of communications at Fiserv, explained why someone who could probably find a free service be willing to pay for online bill paying. “We agree that rather than pay a fee, the first place you should look when you want to get started paying bills online is your own bank’s Web site,” she said. “In many cases today, the bank’s service is free to everyone or free to those who meet certain parameters set by the bank.
 
“For those who can’t get free service from their financial services provider, Fiserv offers a free service — www.mycheckfree.com. It offers all of the e-bills we have in distribution,” she said.
 
Fiserv also provides a service for a fee to consumers whose banks don’t offer electronic billing and payment.
 
Some people remain unconvinced. Taking pen in hand to pay your bills seems destined to become as archaic as carbon paper and typewriters.
 
At least consider dipping a cautious toe in the online bill paying waters. Sign up with just one creditor, pay one bill, and see what happens. Chances are you’ll be hooked. 
 
William J. Lynott is a freelance writer in Abington, Pa.