Everyday Lean: Online Bill Pay
Here's the latest in the series on Everyday Lean.
I love online bill payment. My bank and the web make it easy to view and pay bills while on the road and eliminates a lot of paper that would otherwise accumulate in my mailbox. I am able to save the expense (minimal) and hassle (sometimes significant) of writing checks and mailing them.
But, a few years ago, I made a mistake that almost made me swear off online bill payment forever. I had received a bill from the cable company, due for something like $106.11. With the bill payment website, I had to enter the amount I wanted to pay. In my haste, I didn't type the decimal point and clicked "submit", obviously not noticing my error. Now, I didn't have $10611 in my checking account! I would have expected the payment to "bounce" and to not go through.
I found out, logging in a few days later to see I had nothing in my checking account. The bank had (I later found out as a "courtesy" to me) paid the full amount to the cable company!!! The bank also charged me $29 for the "courtesy" overdraft protection. Now, long story short, it took many days of phone calls to the bank and the cable company to get a refund expedited so I could get square with the bank.
I decided, rather than swearing off online bill payment, to make a fundamental change to my process. For one, I would be "more careful," but that isn't really error proofing. The best I could come up was this:
For each bill, I will only pay WHOLE DOLLAR amounts. If the bill is $106.11, I will round up and enter "107" into the bill payment amount field. Never again will I skip a decimal place and pay the wrong amount. Rounding up costs little, the extra 50 cents, on average, just goes toward the next month's bill. This method has worked -- no disasters like that in over 2.5 years. Now, I recognize I haven't completed error proofed the process. But that's the best I have. Does anyone else have a better error proofing method for this process?
Labels: Everyday Lean
by Mark Graban - Permalink
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I've used Quicken's e-payment service for over 10 years with only two minor errors. Just three days ago I found it has a built-in safeguard against what you experienced... I had to pay an unusually (luckily!) high Amex bill for $14,000 for some overseas plane tickets, and it said the limit per transaction was $10,000... so I had to split it into two transactions. I guess that safeguard is also a nuisance if you regularly have very large bills... though I guess if I regularly had single monthly bills of that size I'd probably have "my people" do the work for me!
Many of the billing companies are working to help with "your" problem. AMEX is one that does a pretty good job. They give you a radio button for the total amount, another for the minimal amount, and one with a line next to it for some other quantity. This is a form of poke yoke. My least favorite, when I was doing business with them, was Sprint PCS because they wouldn't give you a hint as to what your bill was and you always had to do a separate transaction to learn the balance and then another to pay it. It wasn't user friendly and many times when I was on the road paying on the run, I would pay my monthly average bill cost because I knew what it was. I also chose to pay in whole dollars to make the event simpler.
To build on Chet's point, the radio buttons are a big help. That's partly why I use a "Portal" model for online bill pay instead of an "Aggregator".
A portal allows you to set up your accounts along with userids and passwords, and may also provide updated balances and recent transactions. Everything is listed on a central accounts page. However, the portal doesn't directly pay the bill. You click on the link for each account and get auto-logged in directly to the individual service provider. You can then view your most recent bill, any details, and pay the bill - usually with a radio button. Then you go to the next site on your list.
We use MS Money for everything financial, except bill paying. Twice a month, my wife logs into the portal and goes down the appropriate list (mid-month or end-month). The portal logs her in to each service provider site where she can view and pay the bill. MS Money automatically upates itself a day later when the software queries the online account for the service provider.
It's a fairly lean process, but the next step is to go to automatic payments. I've resisted this method in the past, but it's time to embrace progress. I still have complete review of the finances through Money, and my experience is that the provider's chance of making an error is less than mine. Besides, most providers will do the transaction right on the due date, allowing me to keep my money longer (at the whopping 1% interest rate).
Great topic!
Hey Mark, well you definately need to be careful in future. I had also made the same mistake sometime back and had a hard time getting my money back.
Well, i went through a Client's Testimonial on bill.com and things started working fine. I would like to share it with you as well.
Cheers,
Steven
A similar thing happened to me recently. I accidentally sent a payment to my cable company (Mediacom) instead of my credit card company (MBNA). I think that I was in a hurry and saw a name that started with M, so I just sent it to them. They wouldn't send the money back, the just gave me credit. At least it wasn't a large amount of money though. Any error proof ideas for that?
How to error proof the company name?
One idea would be to have "auto pay" set up as much as possible, so you don't have to manually select as many payees, but that works best when it's the same amount each month (like cable, but not the credit card).
I hate to say "be careful" because that isn't error proofing. Is there a confirmation screen that shows what you selected before you confirm and submit?
Auto payments can be tricky as well. They expire and are easily broken up by changing credit cards and bank account information. It can be difficult to tell if an autopay has expired and usually only gives the user a false sense of security. The main problem is that you are human and humans make mistakes. Just pick a set process and stick with it. Most people do not have a set procedure for paying and reviewing bills and just shoot from the hip.
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