Paying bills is right up there with death and taxes as far as certainties go. While the Internet can't make bills go away, it can make paying them a little less painful. Online bill payment automates the entire excruciating process and eliminates the need for writing and mailing checks. It is becoming more popular as a business-to-business vehicle for sending, receiving, and tracking payments, which should come as a relief to the many people for whom this activity is only slightly less painful than, well, death or taxes.
All a business really needs to get started are a Web browser, a bank account, and, of course, bills. Here's how the process typically works: A company signs up with one of the growing number of Web-based electronic payment services, providing its bank account numbers, basic company information, and the names and addresses of payees.
Many companies are coming around to the idea of using online payment services because they eliminate the cash flow paperwork hassles that no one has time for in the first place. In addition, by fully automating the bill-paying process, businesses can sidestep the expense of employing a dedicated bookkeeper or controller.
KEEPING IT LEAN
With no full-time employees, and looking to keep it that way, Quincy Residential Realty in Sharon, Mass., started using PayTrust in January 2000. The company manages apartment units for about 40 tenants, employing subcontractors to handle maintenance and other tenant needs. The sub-contractors submit their bills to PayTrust, which then sends notifications that an invoice has been received
"It saves us time and money," says Dana Schneider, manager at Quincy Residential. "If PayTrust wasn't handling our bills, filing and all, then we would have to employ probably two more people full-time, with salary and benefits; the whole nine yards."
Schneider is also taking advantage of a PayTrust feature that lets him customize his bill payment. "I like to see bills from my service providers first," he says. "PayTrust won't pay those until I authorize it. However, all the bills that come in from our banks, or the mortgages that we pay are the same amount every month. I don't need to authorize them, they just go out every month."
Of course, if Schneider disagrees with the amount of any bill, he still has to resolve the dispute the old-fashioned way, working it out directly with the payee.
Online bill payment service pro-viders offer a variety of features. The e-payment service can receive all a customer's paper bills and show them for viewing on line; send alerts via e-mail when payments are due or overdue; and send either electronic payments (if payees accept them) or a paper check. Some services allow customers to send and receive payments, pay bills only, or schedule which bills to pay and when.
Account activity reports can be generated by the service or customers may track their transactions via the Web. Since these services are Web-based, another benefit is the ability to view account information from the office, on the road, or anywhere an Internet connection is available. That not only makes it easier to keep current with payment status, but it also helps businesses save time.
Workgroup Technology Partners, a systems integration firm based in Westbrook, Me., currently uses Clareon's PayMode to receive and track payments from clients. The company plans to move its accounts payable on line in order to save time and money when handling the approximately 100 bills it pays each month. One reason for the move, according to Gerda Eaton, Workgroup's vice president of finance, is the ability to cut down on time spent getting approval from multiple people. "With Internet access, that second signature can be put on a payment anywhere," she says.
WEIGHING THE COSTS
Online bill payment services are inexpensive to use. Paytrust, for instance, offers several packages, with monthly fees ranging from $3 to $13, plus 50-cent transaction fees. Another service, CheckSpace, is free to payers, but a flat 95-cent transaction fee is charged to payment recipients. In comparison, the fees for accepting credit card payments on line can run between 2 and 3 percent or higher. CheckSpace only charges members if a payee requires a paper check, which costs 50-cents per check.
Tacoma, Wash.-based Donation-Depot.com facilitates giving to non-profit and charitable organizations, accepting donations through several methods including online check acceptance. The company began using CheckSpace to pay its own bills late last year. Before CheckSpace, DonationDepot.com mostly used a combination of online credit card and paper check transactions for incoming and out-going payments. "Previously, we were being charged 3 percent fees on electronic funds transfers and credit card transfer fees," says founder and president, Brandon Fix.
Online payment, like many Internet-based services, is a relatively new trend. And one obstacle that some businesses are encountering is that not all of their vendors or payees are equipped or ready to handle e-payments.
Quincy Residential knows the problem all too well. It uses PayTrust to pay its own bills, such as rent and phone bills, but not all vendors have gotten used to the process. "Some billers still don't understand that they shouldn't be sending bills to our offices anymore," Schneider says. "They should be sending them right to PayTrust, but it's coming along."
"Any change to your process is stressful because you have to learn new software, new procedures, and there are chances for error," says Aaron McPherson, research manager at IDC. "Those fears and stresses keep people from moving to online payments, even if theoretically it would be a great thing for them to do."
According to McPherson, the features offered by these services may speed the growth of online payment services. "Some of the newer ones offer more visibility into the whole process," he says. Suppliers don't need to buy special software, all they need is a Web connection, and they can go on line and see whether the payment's been approved or not. "I think that adds more value to it and might induce people to use it, because it's not just saving you a stamp or the trouble of putting a check in an envelope," adds McPherson. It's now helping you run your business more effectively."
Schneider at Quincy Residential agrees, saying, "We're doing things we wouldn't think possible with our little infrastructure."
Among the current crop of online bill payment services, many offer a wide range of similar features from receipt, payment, and presentment to scheduling, payment notification, report generation, and settlement. Each offers different features and packages with varying fees. For more information, check out the following:
800-720-1818 (toll free)
Yahoo Bill Pay
Bill payment, scheduling and management