Pay Your Bills on a Regular Schedule

Posted by Dave Dunn on December 13, 2007 | 0 Comments

Tags: Bookkeeping, Quickbooks, Small business

Some companies pay their bills the day they get to them and others let them pile up until the pile starts to fall over before digging in. Companies that pay right away never face late payments and are ahead of the game. Companies that wait as long as possible keep their cash longer and don't get distracted by bills on a daily basis. Is one better than the other? Is either good? I don't think so.

While paying bills is a necessary part of every business, it is certainly not strategic. Therefore, a good goal to have with respect to paying bills is to create a bill paying process that uses as few resources (time, energy) as possible. I think both paying bills too often and too infrequently result in a waste of time and energy.

Paying one bill takes at least 5-10 minutes, probably more, and is distracting. You have to open QuickBooks, open the QuickBooks Enter Bills window, enter the bill, close the QuickBooks Enter Bills window, open the QuickBooks Pay Bills window, make the payment, close the QuickBooks Pay Bills window, take out a check and put it in the printer, print the check, etc. Paying 50 bills should only take about an hour. Given this, paying bills weekly is clearly more efficient than paying bills every day.

Letting bills pile up can result in less time actually paying bills, but if they pile up too long, then you have to deal with late payments, extra mail in the form of statements and notices letting you know you are late, and time dealing with creditors. I recommend paying bills once a week (for small businesses - obviously large businesses have departments paying bills all the time). I also recommend doing it on the same day each week. That way you won't forget, you can tell vendors exactly when they can expect to get paid, and you should never have to deal with late payments.

Setting up a regular schedule for paying bills can save an enormous amount of time and energy. It is simple things like this that can make the difference between an efficient and an inefficient business.