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Pay early

If you happen to have extra money left at the end of the month, (yes, this does occasionally happen!) pay those bills with the highest interest rate first.  Doing so may save you hundreds of dollars because every day you delay payment adds more to your balance.  If you make just the minimum payment on your credit card every month, you may take as long as 30 years to pay it in full.  So, pay extra whenever you possibly can to reduce that balance.

When you get a bill knocked down to the point you can pay it off entirely without sacrificing a payment to another creditor, be sure to pay it off rather than continuing to make small payments, assuming there is no pre-payment penalty.  It’s always a good feeling to have a bill totally paid off, and it’s just one less thing you have to deal with each month.

Pay online

If your bank offers a free bill-paying service, schedule your bills for payment in advance.  You can sit down at the beginning of the month and set all of your bills for payment at one time, then just make sure you have the proper amount of money in your account on the dates the money will be withdrawn.  It is the most efficient way to manage your bills, and in some cases, you can have the recurring payments withdrawn automatically without your having to set them up each month.

Alternatively, some creditors will withdraw your payment automatically from your bank on the due date with absolutely no effort on your part after the initial set-up.  Because you will be giving creditors direct access to your bank account, make sure you are setting up this type of a plan with a reputable creditor.  You will usually have to provide the creditor with not only your account number, but also the routing transit number of your bank.  If you don’t know the routing transit number, you can look it up online at a number of different websites.[i], [ii]

Don’t forget to allow for online routing time if you pay via the Internet.  Some payments take anywhere from three to seven days to post if you pay them through your bank, while payments made directly on a vendor’s website may post immediately (and thus lower your bank balance immediately).

Choose carefully

Some people think that because they are in business, they can automatically charge everything to the business, and it will be paid for more simply.  Unfortunately, your business budget also has limits, just as your personal budget does.  You must learn to distinguish between those purchases you have to make to stay in business, and those purchases you make simply because you have money in your pocket at the time you see something you want.

It’s tough to talk yourself out of an impulse purchase in the heat of the moment, and such purposes can quickly blow up your budget so you are no longer able to pay your bills on time.  Taking the time to come up with a decision process before you go shopping can help you to distinguish your wants from your needs when an impulse does arise.

The questions you ask yourself before making a decision will vary, depending on the nature of your business, but most will be similar to the following:

• Can I run my business just for this week, without buying this?
• Can I provide fully adequate service to my customers without buying this?
• Will buying this product or service allow me to expand my business in a meaningful way?
• What is the advantage to buying this product now, when I can’t really afford it, versus later when I have more free cash flow?