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My water bill has an option for automatic payment, which I would like to enroll in (as it would be convenient), but something it mentions about the dates gives me pause: on the page to set it up, it says [emphasis added by me]:

Automatic Payment Service - APS

By enrolling in SJWC's FREE APS program my water bills will automatically be deducted from my bank account at my financial institution approximately 3 working days (excluding holidays) after the payment due date as described on the water bill.

(There's also another page where it instead says "approximately 21 days after you receive the bill".)

Why would the automatic payment be set to happen three days after the payment due date? Shouldn't it be on or before the due date? This makes me worry about possible penalties for late payment etc, though it would be surprising for the "official" system to have a flaw like this.

ShreevatsaR
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    The mere fact that it says nothing about why a failed attempt to retrieve the money would be treated any differently as a failure to pay on time is enough for me to not use this "service". If you want an automated payment, initiate it through your bank's on-line banking on a date of your choosing, so that you can see if the transaction succeeds before the due date while you still have time to correct it. – chepner Jan 12 '22 at 20:39
  • In some places/for some services, it's actually an incentive to switch to automatic payments: if you use them, you'll pay (a bit) later. – jcaron Jan 13 '22 at 13:24
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    @chepner Initiating it through your bank assumes the bill will be the same every month. Letting the utility company deduct the amount means you no longer have to worry about the amount. You also don't need to worry about the due date, as the answers (and many people's experiences) show. – Teepeemm Jan 13 '22 at 17:49
  • @Teepeemm Unless your on-line banking can be configured to receive bills and make payments upon receipt. – chepner Jan 13 '22 at 17:54
  • Does your water bill have sufficient late penalty that it matters? I typically pay something like 75¢ for late water bills. – R.. GitHub STOP HELPING ICE Jan 14 '22 at 00:25
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    FYI, some companies consider a payment to have occurred on the day that you initiate the payment request, regardless of when the funds transfer (provided that they don't bounce). I can't speak for your water company, but it could be a possibility. – user541686 Jan 14 '22 at 09:51
  • @Teepeemm in my country, letting the utility company deduct the amount means you have to worry about the amount even more, because pretty much all major utility companies have been caught overcharging customers, and amount of consumer disputes for this kind of payments was unusually high. – Mołot Jan 14 '22 at 23:57
  • SJWC suddenly charged us quadruple what we expected to be charged. Happily we did NOT have automatic withdrawal set up or we wouldn't have been able to stop them from gouging us with their mistake. They also OFTEN change billing due dates adding to the unpredictability.

    ATT recently took an extra $5 out of an automatic payment.

    The problem with letting a company TAKE from you rather than you GIVING to them is a hard road of hurt, anguish and tooth gnashing. Chances are very high that they won't cover the financial and reputational damage they can do with a one decimal point error.

     – Steven the Easily Amused Jan 15 '22 at 18:27

3 Answers3

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I don't think you have anything to worry with regards to late payments penalties. The sign-up form says this:

Continue to pay your water bill as usual until you receive a bill saying, "APSis in effect. Total due will be deducted from your bank account on or shortly after the due date. Do not pay.", then you will know you are on the program

They may be referring to the ACH processing delay, which they have no control over. Once they submit the charge, it may take up to 3 business days to be reflected on your bank account. They'll submit it on the due date, and you can verify that in their online system to see that it did in fact post then.

How long it would take for it to actually show up on your bank account depends on what bank it is and how many transactional steps there are between SJWC and your account.

littleadv
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    I would very much worry about late payment penalties without something explicit in writing from the SJWC itself. – chepner Jan 12 '22 at 20:40
  • The instructions say: " Continue to pay your water bill as usual until you receive a bill saying, "APSis in e ffect. Total due will be deducted from your bank account on or shortly after the due date. Do not pay.", then you will know you are on the program" – littleadv Jan 12 '22 at 22:22
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    I'm thinking of issues like "there's not enough in my account when you try to take a payment". Aside from an overdraft fees, once this fails to pay your bill, now you are late. Are they going to waive any late fees simply because they chose to wait until the due date to try to collect the money? – chepner Jan 12 '22 at 22:27
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    @chepner how is it different from mailing a check or any other unreliable form of payment? If you're not sure you'll have the money on your account by the due date - that's on you, not on them. You still get the bill, you know the amount, you know the due date and you know what bank account they'll be trying to withdraw from. Make sure everything is in order. – littleadv Jan 12 '22 at 22:29
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    That's just one example. Right now, I don't know what happens if there is a failure, and with my one shot to pay on time gone, I don't know if my payment will be considered late. – chepner Jan 12 '22 at 22:38
  • You can always mail a check early, signing up for autopay doesn't prevent you from any other way of payment – littleadv Jan 12 '22 at 23:13
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    Will autopay take into consideration whether another payment was already credited to your account? – chepner Jan 12 '22 at 23:18
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    @chepner you can call them and ask. I'm not sure what the point of your comments is and how it relates to the question asked. – littleadv Jan 13 '22 at 00:14
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    @chepner I've used many autopay systems, they all take it into consideration. They take out what you owe, and if you prepay then you owe less and they take out less. – Barmar Jan 13 '22 at 15:35
  • Why does it take 3 days? Don't they have computers? – gerrit Jan 14 '22 at 15:40
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    @gerrit you've never used the American banking system? Lucky you. – littleadv Jan 14 '22 at 18:56
  • @gerrit no different to the SEPA (EU) Direct Debit. That’s 3 days too? – Tim Jan 15 '22 at 15:45
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"my water bills will automatically be deducted from my bank account at my financial institution approximately 3 working days (excluding holidays) after the payment due date as described on the water bill."

Why would the automatic payment be set to happen three days after the payment due date?

It isn't. The statement you quoted is about when the funds will be deducted from your account, not about when the automatic payment is set to happen.

Shouldn't it be on or before the due date?

It certainly shouldn't be before the due date. If it was, how would people know when to put funds in their account? They want to make absolutely sure the deduction doesn't occur before the due date, and the most reliable way to ensure that is to process the payment after the due date. That way, if you get the funds there on or before the due date, you know you are safe.

This makes me worry about possible penalties for late payment etc, though it would be surprising for the "official" system to have a flaw like this.

Then you would be really annoyed if they processed your payment on or before the due date. You would reasonably expect that you could put your funds in your account on the due date and not be late.

Imagine if you went to your bank on the due date and found that the payment had already bounced because they processed the payment earlier in the day. That would be incredibly annoying. So they've made sure that can't happen.

David Schwartz
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  • This is exactly right. On their auto-pay application form, they specify the payment will occur "on or shortly after the due date": https://www.sjwater.com/sites/default/files/2018-03/apsapplication_form.pdf – TTT Jan 13 '22 at 06:43
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    IMO this argument that "it certainly shouldn't be before the due date" doesn't quite hold up. I understand that the water company has to choose some date on which to process the payment, and the customer needs to have funds available on that date, but that date is not (necessarily) the due date, which by definition is the date by which the water company needs or expects to be paid. – David Z Jan 13 '22 at 08:32
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    @DavidZ Most of the auto-pay systems I've used allow the customer to specify the date in relation to the due date. So you can say "on the due date" or "2 days before due date", etc. – Barmar Jan 13 '22 at 15:37
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    Your first point is exactly the experience that I've had with auto-bills. The "payment submit date" and "payment cleared date" are 2-3 days apart, and institutions aren't always clear or consistent about which one they're talking about. It's even worse in cases like this where the utility and payment processor are separate entities but the processor's website shows the utility's branding. You think you're on the utility's webpage and that terminology would be consistent, but it's not. – bta Jan 13 '22 at 17:46
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It looks like the due date is not the same as the past due date. For example, this is from an utility bill:

Payment due upon receipt of bill. Late payment charges of 1.25% will be assessed after January 17, 2022

Another one I'm looking at says

Bill is due and payable on date of issue. Late payment charges will be assessed after [some date a few weeks in the future]

In the concrete case of San José water, in their web page it says

Your bill is considered past due 19 days after we mail it to you. Once an account is past due, the person or entity listed on the bill and responsible for the payment is mailed a Past Due Notice.

So the policy seems similar: bill is due as soon as it is created/mailed, and no late penalties are assessed for the next 19 days.

Martin Argerami
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    This is kind of a weird definition of "due date" if it's not the same as the date that it becomes "past due". – Barmar Jan 13 '22 at 15:39
  • I agree. Not my choice, though. Every utility (and other services, too) I have had in my name seems to use it, though. The university my kid attends uses it, too. – Martin Argerami Jan 13 '22 at 15:44
  • It's also kind of like the "grace period" on credit cards. – Barmar Jan 13 '22 at 16:06
  • Indeed. As you say, though, the terminology is awkward. – Martin Argerami Jan 13 '22 at 16:28
  • @Barmar It's very typical. Otherwise, you could not make a payment on the due date unless you could be sure it would be processed on that same day. You couldn't even mail a payment on the due date without it appearing to be past due and then, what, becoming not past due later? That's a strange arrangement that, at least in my experience, is not typical at all. (About the only exception is the notoriously consumer-unfriendly IRS.) Generally, payments aren't past due until significantly past the due date. – David Schwartz Jan 13 '22 at 16:47
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    @DavidSchwartz You don't make the payment on the due date, you make the payment in advance of the due date, so that it will be received by the due date and not become past due. They're using the term "due date" when they mean "invoice date". – Barmar Jan 13 '22 at 16:51
  • @Barmar That is often impossible because there is no way to know the amount due until the due date if the agreement isn't for a fixed amount. Consider a contract that makes payments due when services are provided, which is very, very typical. Generally, there is a grace period between the due date and when the payments are past due precisely because people cannot make payments instantaneously. – David Schwartz Jan 13 '22 at 17:36
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    @DavidSchwartz This is really just a terminology issue. "Due date" should mean the deadline at which time you start getting penalties applied. But they call that "Past due date" instead. – Barmar Jan 13 '22 at 17:37
  • @Barmar As I’m reading it, San José Water is the only entity quoted here to use both due [date] and past due [date] – the others just use due and then talk about late payment charges, which are not necessarily related. And SJW seem to be using the two terms to refer to subsequent days: the bill is past due 19 days after they mail it, and autopay will deduct the money approximately 21 days after it’s received, which (if one-day delivery is assumed) means they will process the payment on the due date, 18 days after mailing the bill. So it’s past due the first day after the due date. – Janus Bahs Jacquet Jan 15 '22 at 10:44
  • Meanwhile, the second item quoted here seems to be setting up an impossible scenario by making the bill due on the date of issue, which is presumably (if it’s a paper bill) before the customer receives it and has any chance of paying it. But then they don’t talk about past due, only about when they start charging late payment fees, which is not necessarily directly related to the due date. – Janus Bahs Jacquet Jan 15 '22 at 10:46
  • The Santa Clara County Tax collector similarly uses "due date" and "past due date". Late penalties only apply after the "past due date" - which is USUALLY two MONTHS after the due date. Unlike the Water Company, SCC "bills" are sent out annually, well in advance of when they are due or past due. – Steven the Easily Amused Jan 15 '22 at 18:33