Posted in Finance, Accounting and Economics Terms, Total Reads: 428
Definition: Automatic Bill Payment
Automatic Bill payment means a payment done on a pre decided date to pay a recurring bill. These are regular payments to be made from a banking, brokerage or mutual fund account to vendors. These payments are generally made from an account or credit card. They are linked with the company receiving the payment. Automatic bill payments occur over an electronic payment system like NEFT(National Electronic Fund Transfer).
It can be easily done from a current account which has no restriction or limit on number f withdrawals or deposits. This is generally used for personal n=bills payable. The vendor is given the power to charge over that current account and the vendor needs to be approved by the payer. But the account holder has the power to keep the automatic payment system on or off.
For example, suppose we buy a car of 10 lakhs and every month 50,000 needs to be paid for 24 months. The payer would link his account to the receiver’s account so that every time he does not need to make payment and the money gets automatically deducted from the account. In this way automatic bill payment system works.
• Time Saving
• Ease of transfer
• In case we forget about the automatic payment and the balance is not maintained, a payment fee would be charged without payment.