I doubt that paying bills is in on your list of favorite things to do, but they are a fact of life and business which cannot be avoided.  Also, there are real financial consequences for paying them late, or not being able to prove you paid them at all, even if you did.  In addition, the emotional stress takes away from your peace of mind and ability to work efficiently.
The goal here is to organize systems in your home office and to get this job done as efficiently as possible.  Along with helping you avoid any financial penalties, these systems will help you not worry about what hasn’t gotten done, or if bills are falling through the cracks, so you can get on to more fun things in your life.
Step 1: Sort and Gather Unpaid Bills Into One Area Of Your Home or Office
Set up a mail center for all incoming mail, sorting through it as it comes in the door of your home or office.
The reason you need to keep all your bills in one location is to make sure you deal with each one of them during your weekly paperwork session (see step 2 below), and don’t forget some of them are in your purse, tote bag, or car, while others are possibly at home on the kitchen table buried under a big stack of other papers.

When you receive any bills in the mail, I suggest quickly opening the envelope and writing the due date for the bill on the front of the envelope it came in, so you make sure you know by what date it needs to be paid, and don’t miss the deadline.  Ideally, if you wish to corral your bills in a specific bill organizer,  a tickler file which helps you differentiate the due dates for the bills, you can use a product such as the one shown here:
Step 2: Set A Weekly Schedule To Focus On Your Finances And Pay Bills
The next step is to set up a weekly paperwork session for you to pay bills, focus on financial issues and deal with any other paperwork in another scheduled session.  I recommend this time be scheduled during business hours as we often will need to make calls to verify information or make arrangements.

Why should you do this weekly? There are several reasons that a weekly schedule for bill paying works best, even if you don’t get paid every week, but instead twice a month, monthly, every two weeks, or like me, since I work for myself, irregularly.

These reasons include:
  • No matter when you get paid, bills come due at various times during the month, and typically the due dates have nothing to do with your schedule for getting paiid.
  • Dealing with paperwork weekly, as opposed to daily, when you receive it, lets you batch these types of tasks together, which saves you time
  • You can easily miss deadlines if you let paperwork sit too long, but typically if you are habitual about it, letting something sit for a maximum of a week won’t be a problem. 
  • It is easier to make something you do every week a habit, than it is to try to spread out the schedule into longer periods between activities.
  • During this weekly session when I pay and organize bills, to also organize receipts, make phone calls related to bills or other home related issues, work on the budget, balance my checkbook, review my online financial accounts, deal with medical or other insurance claims, make the meal plan and grocery list for the week, update my calendar, send out notes and greeting cards,and other such activities that need to get done regularly.
Sort Bills for Payment Based On Due Date and Pay Ones Due Soon During Weekly Paperwork Session
During this weekly paperwork session the goal is to pay all bills that are coming due soon.
To help you keep track of due dates, I’ve create a printable monthly bill organizer worksheet that you can use. The page contains instructions for how to use it to help you organize bills payments. In addition, there are many workbooks available to do something similar (such as the one shown below to the right).
Many bills are paid on a monthly schedule, and their due dates tend to fall at the same time each month. If you pay attention to your bills’ due dates for a couple of months you will quickly be able to figure out which bills must be paid in which weeks to pay things in a timely fashion, and can organize bills payment accordingly.
Look at the due dates for all bills, subtract seven days for mailing and processing them (that is an extra cushion for you, to be on the safe side), and you know the last day you can mail them out to be paid (make sure mail runs that day, otherwise subtract another day).
Then, if you pay bills regularly on a specific day of the week each week, as I’m suggesting you do, you can calculate which of those bills needs to be paid during this week’s paperwork session to meet your deadlines, and can’t wait to be paid during next week’s session.
As you pay each bill make a note on your part of the bill you keep in your records the date you paid it, and the check number (or confirmation number if you paid online), so that if you have a dispute later about payment you can tell, quite easily, what you did and reference the right paperwork quickly.

Special Instructions for Online Bill Pay
I realize that not all people pay all their bills by check anymore, nor do they receive all their bills in the mail, but instead many people have chosen to go paperless. However, whether you pay bills online or once you receive them in the mail you’ve got to keep track of them and this weekly paperwork and financial planning session is when you do that.
There are some advantages to online bill paying, such as having payments automatically withdrawn from your checking account each month for certain regular bills, and not having to receive additional paper into your home that you have to then file.
However, handling things online instead of in an old-fashioned way does not mean you can abdicate responsibility for planning, following up, checking on things, and making sure everything works as it should.
In fact, since there sometimes is no paper to remind you of what’s happening, you’ve sometimes got to be more organized and methodical about how you deal with these types of payments.
For example, during your weekly paperwork session you should do the following related to online payments, to make sure you organize bills payments adequately:

  • † Make sure you have adequate money in your account for all payments that will be drawn from your account soon
  • †Track and confirm all automated payments that have been mad†e,       Make sure you haven’t missed any notices or issues that may have been sent to you via email regarding online bill pay.
Should You Invest In Bill Payment Software?
There is no requirement that you get special computer programs or online software systems to help you with paying your bills each month. You can easily do all this paperwork by hand, or with a simple computer spreadsheet if you wish.

However, some people find it helpful to use a program to help them keep track of their spending, and budgeting.  One of the most widely used software programs available is Quicken/QuickBooks which can help you set financial goals and track them, along with planning and budgeting and bill paying. A

Most banks have online bill payment these days, so check with your bank too.  These systems are pretty simple and have calendars to see at a glance your upcoming and historical payments.  Anotehr advantage is they can interact with your personal financial software system, even if it’s as simple as a Microsoft Excel spreadsheet. 

Step 3: Organize Bills After Payment For Quick Access In Your Filing System If Needed
The next step is to set up a simple filing system to keep track of your paid bill receipts and stubs in case you need to reference them again.  (I recommend using The Paper Tiger software to manage your file inventory.)
Most bills don’t need to be kept long term, but can be tossed after a certain period of time.  (Note, the Paper Tiger has a reminder system to help you manage when to purge files.)
However, it is in your best interest to keep them around for approximately a year or two in case there is a dispute about payment or something like that, so you’ve got your records in place.  If you actually do have a dispute about a bill it is best to keep such disputed records, even once you think everything has been resolved, for at least two to three years (or longer, depending on your state’s statute of limitations for contract disputes or open accounts).

The easiest system, in my opinion, is to save all your paid bills by the month in which you pay them. That means, at the beginning of the year, you should create 12 folders, labeled January through December, and as you pay each bill just drop the paid bill into the correct month’s folder. In the alternative, get an expandable folder with twelve compartments (such as the one to the left, and have one of these designated for each year.) If you need to reference a specific bill just go to that month’s folder and retrieve it.  You can mirror this filing system on your computer should you decide you want to scan the bills and file on your computer electronically.

This system makes it really easy to file the paid bills at the end of your paperwork session too. You can just drop basically everything into the file folder and move on to the next task. It is so simple and easy there is no reason to put it off until later.
In my opinion, there is no need to have separate folders for each type of bill. The only exception to this would be bills that you need to keep as records for tax purposes. Those bills should be kept in a separate set of tax document files.

Step 4: Create an Annual Routine For Getting Rid Of Old Paid Bills To Clean Out Your Filing System
The final step, is to create an annual routine of purging your filing system of old papers. Again, my recommendation here is to use The Paper Tiger filing system as you can run reports to organize the process.  It will be such a breeze!
In the meantime, at the end of each year, when you make your 12 file folders for the upcoming year for your paid bills, take a minute to throw away all the bills in accordance with what your accountant recommends for you and your business.
This annual toss out will keep you from accumulating too much paper in your filing system that isn’t needed. Make sure to shred any documents which contain personal identifying information or account numbers that could be used for identity theft.   If it’s too much to shred with your personal shredder, stores like Office Max or Office Depot will shred for under $1.00 a pound. 

Tell Me How Your Bill Paying System s Working for You!

You can tell me your progress or give me more ideas for how you’ve organized your bills in the comments. You’ve worked hard to get organized, so now here’s your chance to share your success and pass it on.

Here is a link to my Amazon.com online store of recommended products.  http://astore.amazon.com/thepapertigerproductivitystore-20
For The Paper Tiger filing system, http://app.thepapertiger.com/signup/affiliate/ehodk

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