A Better Way to Manage Your Everyday Money - Book - Page 86
PerNetFlow) all I have to do is click the Done button and then adjust credit card payments to
cover the new Auto Credit Card charges. It usually takes me less than five minutes.
Lead times
To make bill payments on time, the payments must be submitted in advance of or on the due
date. The time between when a payment is submitted and is due is called the payment lead time.
The length of a payment's lead time is affected by the payment method.
For example, a person lives in Idaho and mails a monthly payment to a subscription service in
Florida. Payments are due on the fifteenth of each month. The usual time for a letter to get from
Idaho to Florida is four days. Payments could be mailed on the eleventh for a four-day lead time.
Doing so assumes payments will always be received within four days and that the company will
open and process the payment before the close of business on the same day the payment is
received. There is no allowance for:
● unexpected mail delays
● due dates falling on weekends and holidays
● the eleventh falling on a day when there is no mail service
When the fifteenth falls on a weekend or holiday, does the company move the due date to the
following business day? If not, payments that could have arrived on the fifteenth will be received
after the due date, possibly resulting in a late fee.
One solution for overcoming all the possible mail delays is to extend the lead time to two weeks.
Payments would be mailed on the first of the month. Extending the lead time, however, does not
eliminate the ever-present risk of a payment getting lost in the mail.
Alternatively, if the company accepts credit card payments, monthly payments could be charged
on the company’s website or by calling customer service on or before the due date. Late fees are
still possible if you forget to make a payment, but the concern about possible delays with mailed
payments are avoided.
The optimal solution
would be to take
advantage of automatic
payments, which are
often referred to as auto
pay. If the company has
auto pay available,
signing up for this option
puts the responsibility for making your payments on time with the company. There is no payment
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