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View Full Version : Why won't some companies allow a payment before it's due or allow overpayment?


Quintas
02-27-2010, 10:39 AM
For example, my bill for my ATT UVERSE DSL and Cable TV will generate on the 28th. I know how much the bill will be. I just logged into my account to go ahead and make the payment and it says I can't because no bill is due. Also, when a bill is due, i'm not allowed to make a double payment and therefore have it out of the way for 2 months. The same applies to my cell phone bill through TMobile.

My utility company, however, will let me pay more than is due, and apply the overpayment on subsequent bills.

Is there a business reason why some companies wont allow this?

crazyjoe
02-27-2010, 11:25 AM
I am not sure why you would want to overpay or pay in advance, but you can set them up to automatically bill to a credit card, and then you could put a credit balanace on the card, and that would work.

IAmNotSpartacus
02-27-2010, 11:29 AM
Is there a business reason why some companies wont allow this?

First and foremost, a credit on your account is a liability on the company's books. Some beancounters don't like liabilities. In spite of the fact that this liability will be temporarily offset by cash in the bank, until it's been offset by your bill...

Additionally, I know for certain that AT&T charges a non-insignificant "service fee" for late bills, IIRC it amounts to 3-5% of your bill total. That's a much better return on their money than putting it in a bank.

Markxxx
02-27-2010, 11:29 AM
Because it's unearned income and it shows up as a liability on their books.

$20 doesn't sound like much to you but if a thousand customers do this the company now has $20,000 on the books of unearned income which is a liability that decreases the profitablity of the company

Cat Whisperer
02-27-2010, 11:29 AM
From working in a payment processing centre, one reason I can think of is that there is no amount to apply your payment to if you pay before you are billed. The money can be applied to your general account, but when you start putting money on people's accounts without specific bills to apply to, it can get awfully messy and hard to follow and straighten out in a big hurry. It's much easier to follow "Billed for $45 Jan. 5th on invoice 555212 - paid $45 Jan. 20th. on cheque #123 (or internet payment XXXXXXX)" than "Added $45 to Account X Jan. 4th - have to remember to go back into account at later date and apply it to appropriate invoice if you can figure out which one it is since customers don't always pay the exactly right amount and many customers pay for more than one invoice on one cheque or payment." Also, some programs don't allow you to add an amount to an account without a balancing entry, which you can't make if the invoice hasn't been generated yet.

thelurkinghorror
02-27-2010, 01:08 PM
I've made a double payment to AT&T accidentally through my bank's billpay (I don't think It's Uverse or really know what that is). Obviously that's a different issue and they can't refuse until after they have my money, but it went through and my next bill was a few cents.

J Cubed
02-27-2010, 02:48 PM
I think what the OP is seeing is just a missing feature of the payment site. The database doesn't have an unpaid bill in it, so the software either doesn't show the Make Payment link or gives an error when you click it. But, as thelurkinghorror says, if you get the money to them a different way, you will owe them negative money until the next bill.

Quintas
02-27-2010, 02:55 PM
I am not sure why you would want to overpay or pay in advance

I just like the psychological feeling of being paid ahead by a month or two on those type things.

Bijou Drains
02-27-2010, 03:00 PM
I once overpaid my car insurance by mistake and they sent me a check back because it was at the end of the policy year. But if I pay too much during the year they are OK with that.

t-bonham@scc.net
02-27-2010, 06:22 PM
Additionally, I know for certain that AT&T charges a non-insignificant "service fee" for late bills, IIRC it amounts to 3-5% of your bill total. That's a much better return on their money than putting it in a bank.This is the reason.

They can make a lot more money by hitting you with 'late fees'. So they don't allow you to pay in advance, thus having a short time period where you can actually pay without incurring late fees. A certain percentage of customers will forget to make their payment during this time, so the company makes extra money on the late fees.

KellyCriterion
02-27-2010, 09:20 PM
I live in Australia, and routinely over pay, or pay early, my electricity/phone/internet etc. Never had a problem with it. I wonder if there are laws here stating that companies must allow it.

Iridescent Orb
02-28-2010, 12:15 AM
Because it's unearned income and it shows up as a liability on their books.

$20 doesn't sound like much to you but if a thousand customers do this the company now has $20,000 on the books of unearned income which is a liability that decreases the profitablity of the company

Markxxx is correct that it will show as a liability on their books, but it does not decrease the profitability of the company. The liability will show up on the Balance Sheet and be offset by an equivalent asset (e.g., cash), so it is a zero-sum game for the company. (Income Statement items are the ones that impact profitability.)

I agree the reason is most likely to increase the number of "late payments" and associated fees. One work-around might be to pay your bill through your bank's online payment system, if available. Issue a payment to AT&T (to your account number with them) for whatever amount you want. They will take it. :)

Quintas
02-28-2010, 12:23 PM
MarkxxxOne work-around might be to pay your bill through your bank's online payment system, if available. Issue a payment to AT&T (to your account number with them) for whatever amount you want. They will take it. :)

That is how I pay my bill. But it won't allow a payment in excess of the amount due. And it wont allow a payment until you get a notification saying "your bill for (month) is ready".

I suspect it has to do with wanting to collect late fees.

Bastards.

IAmNotSpartacus
02-28-2010, 12:35 PM
That is how I pay my bill.
How does your bank know how much your bill is for? And when it's issued and due? This is not a typical exchange of customer information.

Iridescent Orb
02-28-2010, 12:55 PM
This is a little different than what I have seen - it sounds as if AT&T is sending your billing information to your bank. You then select and pay that specific bill through your bank's online system.

Does your bank allow manual payments? You may be able to enter in the payee information manually (i.e., set up AT&T as a manually payee) and have the bank issue either an electronic payment or a paper check. Add your account # to the memo field and you should be OK. This is analogous to putting a check in an envelope with instructions to credit your account # and mailing it to their billing department.

In other words, you would not be paying a specific bill but rather applying money your account. When doing this, you could pay whatever you wish.

I hope this helps.

Cat Whisperer
02-28-2010, 01:08 PM
How does your bank know how much your bill is for? And when it's issued and due? This is not a typical exchange of customer information.
Banks take in the money from you and forward it to the company itself electronically. Once your money reaches the company, they still need to figure out which invoice to apply it to.

I don't like banks any more than the next person, but I really don't think this is all late fee related - large companies that are processing thousands of payments every month are more concerned with keeping payments and invoices straight than they are with jerking you around for late fees.

Quintas
02-28-2010, 06:40 PM
How does your bank know how much your bill is for? And when it's issued and due? This is not a typical exchange of customer information.

I misread you. I just saw "submit an online payment", thinking you meant, pay via ATT website.

BigT
02-28-2010, 10:10 PM
Banks take in the money from you and forward it to the company itself electronically. Once your money reaches the company, they still need to figure out which invoice to apply it to.

I don't like banks any more than the next person, but I really don't think this is all late fee related - large companies that are processing thousands of payments every month are more concerned with keeping payments and invoices straight than they are with jerking you around for late fees.

I don't believe that at all. If so, getting late fees removed because the bank made a mistake would be much easier. They woudn't run through the bills before they credit you with deposits, even if the deposit was made the day before. Or hold on to your bills, putting through the ones that make you overdrawn fastest so they can charge a late fee on each of the others.*

Banks are specifically set up to maximize late fees.

*Let's say you have $50 in the bank. You make a $1 purchase, a $20, a $10 and a $35, before realizing that you didn't have enough for that. The bank will not put them in in order, as that would only get them one late fee (for the $35). They will take the biggest ones out first, allowing them to charge you three late fees (for the $20, $10 and $1). I learned this the hard way.

Nava
02-28-2010, 11:48 PM
How does your bank know how much your bill is for? And when it's issued and due? This is not a typical exchange of customer information.

Not in the US, but it's the usual way in Europe. I fill in a document telling my debtor to charge me at bank account such-and-such-number (properly signed, of course, which nowadays can be done via e-signature) and they do. The bank knows how much to pay because the debtor is telling them; they know it's ok to pay because they have my authorization on file (the debtor sends it with my first bill at the latest).

Most people also get paid the same way, by e-transfer. Every time I move to the US I feel like I'm stepping back to the 50s, money-management-wise.

IAmNotSpartacus
03-01-2010, 12:19 AM
Not in the US, but it's the usual way in Europe. I fill in a document telling my debtor to charge me at bank account such-and-such-number (properly signed, of course, which nowadays can be done via e-signature) and they do. The bank knows how much to pay because the debtor is telling them; they know it's ok to pay because they have my authorization on file (the debtor sends it with my first bill at the latest).

This is nothing like the situation we are talking about. Your example is analogous to using the merchant's bill pay service, except having it withdrawn via EFT instead of paying with a credit card.

What is being discussed is a bank's bill-pay service, which basically does nothing more than mail a check to the merchant at the customer's request. Many banks will have relationships with large vendors so that this payment is made electronically, however my customers that pay me through their billpay end up getting a check sent on their behalf from their bank.

Cat Whisperer
03-01-2010, 12:26 AM
I don't believe that at all. If so, getting late fees removed because the bank made a mistake would be much easier. They woudn't run through the bills before they credit you with deposits, even if the deposit was made the day before. Or hold on to your bills, putting through the ones that make you overdrawn fastest so they can charge a late fee on each of the others.*

Banks are specifically set up to maximize late fees.

*Let's say you have $50 in the bank. You make a $1 purchase, a $20, a $10 and a $35, before realizing that you didn't have enough for that. The bank will not put them in in order, as that would only get them one late fee (for the $35). They will take the biggest ones out first, allowing them to charge you three late fees (for the $20, $10 and $1). I learned this the hard way.
I'm getting the feeling we're talking about two different things. I'm talking about payments made through your bank that they simply forward to the company that you have an account with (like paying your water bill online with your bank). The bank has no stake in your payment other than providing the service of forwarding the payment. I'm not talking about making payments for banking services or the bank processing transactions for purchases.

Quintas
03-01-2010, 12:42 AM
Not in the US, but it's the usual way in Europe. I fill in a document telling my debtor to charge me at bank account such-and-such-number (properly signed, of course, which nowadays can be done via e-signature) and they do. The bank knows how much to pay because the debtor is telling them; they know it's ok to pay because they have my authorization on file (the debtor sends it with my first bill at the latest).

Most people also get paid the same way, by e-transfer. Every time I move to the US I feel like I'm stepping back to the 50s, money-management-wise.

This is getting off subject, but why do you feel this way? Everything you described is available and common in the U.S. Every job i've had since the mid-90's has paid me via automatic deposit. Is that what you mean by e-transfer? As for your second point, automatic payments are available. I don't like using it for utilities and such, on the off chance I get some wildly inaccurate bill and it's deducted before I can sort it out.

bengangmo
03-01-2010, 01:47 AM
I've always enjoyed paying a little extra in recurring bills every month - the order of $5-$20 for utilities, phone and the like.

Why?

I know it doesn't make financial sense, but I just like that as I build up a credit, if something goes wrong and I forget to pay, or worse, don't have cash on any given month the bill is taken care of.

Further, that $5 or $ 10 I am overpaying wouldn't be put towards anything else - it would end up being spent on an overpriced and un-needed latte

Omar Little
03-01-2010, 08:43 AM
$20 doesn't sound like much to you but if a thousand customers do this the company now has $20,000 on the books of unearned income which is a liability that decreases the profitablity of the company

:smack:So says the person, who apparently know nothing about accounting.

Cat Whisperer
03-01-2010, 10:49 AM
I've always enjoyed paying a little extra in recurring bills every month - the order of $5-$20 for utilities, phone and the like.

Why?

I know it doesn't make financial sense, but I just like that as I build up a credit, if something goes wrong and I forget to pay, or worse, don't have cash on any given month the bill is taken care of.

Further, that $5 or $ 10 I am overpaying wouldn't be put towards anything else - it would end up being spent on an overpriced and un-needed latte
I understand why you like to do that, but from a payment processor perspective, you're messing up the system and making more work for people. You think leaving extra on your account is a good thing, but from the company's perspective, their goal is all zero balances, all the time - that means everyone is current, with no late payments or overpayments. If you do this every month, you'll probably always have extra in your account, and some companies have a policy of sending you a cheque for extra money on your account after a certain period of time, because if there's one thing accounting departments like, it's numbers that balance, and you are preventing that.

A utility company is not your personal savings account - all they want is for you to pay what you owe, when you owe it. And write your numbers legibly and include your account number. :)

MitzeKatze
03-01-2010, 11:13 AM
I don't know exactly why companies do not allow it (although you have some very good answers already) but I do empathize and know a little bit of a way around it at least on a personal level.

At one point I was very, very broke and unsure if I would have the money to pay the bills. While I realize most people go through that at least for a bit at some point in their lives, my screwed-up psyche took it to new levels and now that I do have the money for bills I am very, very anal about them. My goal is to never owe anyone anything, period. That means the day the bill drops is the day it gets paid, and for places that allow it I am paid up at least a month, sometimes two or three in advance.

What I do for recurring bills that do not allow pre-payment is to simply set aside that amount of money, every month on the same day then set the calendar for the day the bill will drop (I am anal enough about it that I do know the exact date each of the utilities will bill) and make the online payment that day (it takes just a minute, so doesn't need a block of time devoted to "paying bills" or anything like that). The bills that do allow pre-payment (rent for example) I pay ahead by two or three months. So at least in my own personal records I am ahead, and at any given time I have the entire monthly bills amount set aside (usually for two or three months) so if something catastrophic happens, at least those bills will be paid.

yabob
03-01-2010, 11:25 AM
Heh. When I started using online banking, I went to the other extreme. When I mailed in bills, I used to just sit down once a month and write all the checks at once. With online banking, I find that I schedule the payment for delivery the business day before due date. Have to make that extra $0.00001 in interest on the money before parting with it ... I don't like automated payouts, but I do get electronic bills through the bank where possible. I also don't use online for any bills that aren't on the bank's canned list, allowing you to enter the account number through a specific dialog. I don't trust a random payee to have their accounting procedures together enough to credit me properly without the mail-in slip if they haven't set something up with the bank. Most of my regular bills ARE on the list. This is just another illustration that medical billing needs to have something done about it - doctors, etc, are the notable exception. The guy who mows my lawn and leaves me a bill stuck in the door, I don't expect to be able to handle this way.

Nava
03-01-2010, 11:27 AM
This is getting off subject, but why do you feel this way? Everything you described is available and common in the U.S. Every job i've had since the mid-90's has paid me via automatic deposit. Is that what you mean by e-transfer? As for your second point, automatic payments are available. I don't like using it for utilities and such, on the off chance I get some wildly inaccurate bill and it's deducted before I can sort it out.

Because for many people in the US, checks are still the "default" mode. The last time I worked there (2003), the company paid by direct deposit, although it was every two weeks (I'm used to monthly payments), and I had to pay several of my utilities by check. Since I spent 70% of the time traveling, this last detail was a PITA.

MitzeKatze
03-01-2010, 12:06 PM
Heh. When I started using online banking, I went to the other extreme. When I mailed in bills, I used to just sit down once a month and write all the checks at once. With online banking, I find that I schedule the payment for delivery the business day before due date. Have to make that extra $0.00001 in interest on the money before parting with it ... I don't like automated payouts, but I do get electronic bills through the bank where possible. I also don't use online for any bills that aren't on the bank's canned list, allowing you to enter the account number through a specific dialog. I don't trust a random payee to have their accounting procedures together enough to credit me properly without the mail-in slip if they haven't set something up with the bank.

I am just the opposite. I don't trust my bank's online bill payment or recurring payments. I don't know why, because I do trust the bank in general. So for online payments I will only deal with the bills that allow me to pay them directly through their site (electric company, cable, cell phone, etc.) and the only payments I allow the bank to handle are the ones to the bank (car loan, etc.).

I also worry about scheduling payments for a later date even through their own sites, so the day the bill drops is the day that I log on and the day it is paid.

I know that is just a quirk of mine, but the only bill I have that doesn't have their own online payment is the rent, so that is the only one that gets paid by paper check, and it is not at all inconvenient to stop by the leasing office to drop it off when I am out walking the dog anyway. That is also one that allows pre-payment so I usually write them a check only every few months.

Swallowed My Cellphone
03-01-2010, 01:01 PM
I am not sure why you would want to overpay or pay in advance,I have done so when traveling, knowing that in the backcountry I wouldn't be able to access any payment options.

My phone bill and utilities were paid one full month in advance. My next bill reflected the credit.

whatami
03-01-2010, 11:21 PM
Because for many people in the US, checks are still the "default" mode. The last time I worked there (2003), the company paid by direct deposit, although it was every two weeks (I'm used to monthly payments), and I had to pay several of my utilities by check. Since I spent 70% of the time traveling, this last detail was a PITA.

Most (all?) banks that offer bill-pay have an option to send a paper check. So for me, my garbage and my water bill are both paid by paper check that is generated by my bank (actually my bank's bill-pay business partner) and mailed to the address I specify with my account number noted on the check.

This can be fun when paying out the yearly fantasy football winnings to friends. I always make sure to put something fun in the memo line. Generally something about sexual favors or something.