Ever paid off a gas or power bill right from your banking app? Then you’re already familiar with the amazing convenience of online bill pay services.
It’s not just for personal bills anymore, either. Businesses can also use bill pay for outstanding balances with service providers.
With a bill pay option, your firm can easily address any concerns about online payment security (and stop checks from piling up in the firm’s lockbox.) Most importantly: It’s a small lift to improve the client experience in a big way.
Here’s how it works – and why you should consider adding this option to your payment suite.
How Do Bill Pay Services Work?
Most banks give their customers free access to bill pay services once they set up a checking account. Bill pay is accessed through the bank’s website site or mobile application.
To make a payment, the bank’s customer just logs into their account and locates the payee in the bill pay directory. They can also add the payee’s name and address manually if they have the name and address.
Once a payment is scheduled, the funds are debited from the customer’s bank account and transferred to the payee right away. Customers can also set up automatic recurring payments for regular bills.
Why Do I Need a Bill Pay Provider?
Your clients can technically pay you today with bill pay services, simply by adding your business name, address, and other details to their banking app.
However, this isn’t the most efficient or convenient way for clients to use this great feature. For one thing, clients must enter all your data with 100% accuracy – something that rarely happens with checks as it is.
For another thing, a third-party provider will be able to list your company with many financial institutions all at once. This ensures that most (if not all) of your clients will have an accurate and simple bill pay option available to them.
Why Not Just Use Traditional Paper Checks?
The New York Times recently reported that check fraud has dramatically increased over the last few years. In fact, FinCEN received more than 680,000 reports of check fraud in 2022 – almost double the amount reported in 2021.
This isn’t a totally new problem: Physical checks have always been prone to getting lost, stolen, or manipulated. But rising fraud isn’t the only reason to ditch the paper check.
Here are 4 of the biggest challenges that come with traditional checks:
- Time-consuming process: It’s always slower to manually process checks through “snail mail” than it is to process payments digitally. It can take weeks to receive, sign, and process one check.
- High risk of human error: A single payment mistake isn’t the end of the world. But checks introduce way too many errors in the billing process – and all the bad handwriting and typos can cause serious headaches for your staff.
- Easy to lose: Some clients say they prefer paper checks due to security. But even without the risk of check fraud, physical checks can easily get lost in the mail or sent to the wrong address, extending the time until you get paid.
- Record-keeping and storage costs: Storing individual checks is cumbersome and costly compared to storing digital records (especially if you need to keep them for a long time.) Many firms also pay high fees for lockbox services so that the bank can process large volumes of checks.
Learn more about the hidden costs of accepting checks in this blog post.
Benefits of Online Bill Pay Services
Bill pay services are a win-win for professionals and their clients. The most significant benefit is that it’s much faster than almost any other form of online payment. In some cases, you’ll get paid in cash within hours (instead of days.)
Professional services firms will also benefit from having more streamlined payment processes, billing transparency and payment tracking, and improving records of client payments.
Here are the top 10 benefits of using bill pay services over checks:
- Payments always arrive securely and on-time.
- Each payment is guaranteed by the client’s bank.
- It cuts into your firm’s costs for processing and storing checks.
- It saves time on manual data entry.
- It allows you to address client concerns about security.
- Clients can set automatic recurring payments, such as for a monthly service retainer.
- It’s environmentally friendly.
- It’s easier to reconcile and track client payments.
- It reduces the number of checks arriving at your lockbox.
- It creates a modern, convenient payment experience.
Tips for Getting Started
So far, we’ve reviewed how bill pay services can provide significant advantages over traditional checks – including added convenience, stronger security, and more efficient billing operations.
But how do you get started, and what should you expect to pay when you find the right provider?
Cost Considerations for Online Bill Pay
While bill pay services are completely free for your clients to use, they may not be 100% free of charge for your firm.
It’s important to do your research here, as many third-party providers and financial institutions will overcharge to list your firm in their bill pay directory.
Here are two areas where you may need to watch for costs:
- Monthly fees: Many online payment providers will require a monthly subscription fee for ongoing use of their service, so be sure to factor this into your budgeting and find a service that fits within your budget.
- Transaction fees: Large-scale payment processors may also charge hefty transaction fees for each payment processed, even if those payments were sent via bill pay services. Watch out for these fees and be sure to ask your payment provider how they charge per transaction.
Next Steps for Implementing Bill Pay
1. Choose the Right Bill Pay Provider.
Be sure to invest in software that integrates well with your accounting practice management or invoicing system. Make sure it provides adequate security measures and can handle automated or recurring billing.
2. Get Clients and Staff Up to Speed.
Then, establish a clear policy around your firm’s bill pay system. Set up clear instructions to your clients for using this bill pay method, and train your staff on the process for tracking and reconciling these payments.
3. Track and Monitor Payments.
Once payments start getting processed through direct online bill pay, be sure you and your team are reporting on the volume of payments submitted this way.
4. Review and Optimize.
Ensure that your bill pay process is working as intended by consistently monitoring and verifying payments, optimizing workflows, and adapting the system to meet the changing needs of your clients.
Ready to learn more about online bill pay services? QuickFee has a simple option designed to work for CPA firms.
