Avoid sleepless nights with a strategy known as bill smoothing

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A Canstar Blue survey of 5000 Australian adults found that one in four electricity customers struggles to pay the bill on time. That number is likely to spike in winter in southern Australia and in summer in northern regions when heating and cooling drives costs even higher.

But sleepless nights might be averted by a strategy known as bill smoothing.

Financial comparison site Canstar describes bill smoothing as a way of paying smaller amounts more frequently, rather than paying one large bill a few times a year.

Canstar explains that there are two ways of doing this: a formal payment plan with the service provider or informally making more frequent payments on your own.

“With the formal bill smoothing structure, the provider creates a payment plan where you pay a portion of an estimated bill at regular intervals. It works by calculating the total estimated cost of your energy bills for the next 12 months and then splitting the amount into equal weekly, fortnightly or monthly payments,” Canstar says.

To calculate regular payments, your energy provider will look at your usage over 12 months and compare your bills to customers in your area with similar usage patterns. Rather than paying quarterly bills of varying amounts throughout the year, you would pay the same amount each week, fortnight or month.

If your actual usage is higher than your payments, you would receive an additional bill at the end of that quarter or year, or, if your usage is less than your payments, you would be “ahead” on your next bill.

Canstar says many energy retailers have a formal bill smoothing structure, including: AGL, Click Energy, Diamond Energy, Power Direct, Origin Energy and Red Energy.

It says some energy retailers are also offering “fixed cost” plans, which calculate a tailored monthly cost for customers based on how much energy they have used in the past and how they heat and cool their home.

If you receive benefits from Centrelink, you can use Centrepay to make regular payments from your benefits. You can easily set up regular payments through your monthly account for such bills as:

  • rent and mortgage payments
  • phone and internet bills
  • electricity, gas, and water
  • home services
  • rental payments
  • medical services.

How do you manage your bill payments? Would something like this help you? Or do you have any other suggestions to help our members avoid debt and pay bills on time?

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Written by Janelle Ward

13 Comments

Total Comments: 13
  1. 0
    0

    We’ve always had a separate bill account where money goes in fortnightly for our bills, every January we calculate how much all the bills for the year plus a bit will be and put that amount away each fortnight, easier to do nowdays with internet banking. Saves all the sleepless nights and at the end of the year we quite often have a surplus to help out with Christmas.

  2. 0
    0

    Best advise I ever had was always have a budget . Has helped in all parts of my life .
    Its not what you make ,but what you do with it.

  3. 0
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    Hubby and I have always put away each fortnight of our wages and now our pension for all our bills, and they are all paid on time. It’s the same for Christmas presents I save so much a fortnight it goes into a separate account like our bill money does. It all helps.

  4. 0
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    you can put money on the next electricity bill simply by taking the paid receipt from the last bill in to the post office , with the money u want to put towards the next one same with car rego etc ive done this for years not much left to live on but the bills are paid

  5. 0
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    I’ve used bill smoothing for my electricity for many years and I have an Excel budget plan as well. This has helped me a great deal, being on the pension.

  6. 0
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    Separate bill account calculated each year plus a bit (as others have stated). Calendar updated for full year to see at a glance when bills are due so as not to miss any. I’d rather the $$ sit in my account collecting interest (as pitiful as it is) than paying each month and getting nothing

    • 0
      0

      My annual budget of necessary bills.

      January…….…House insurance ……………………..….….$1811
      February….….Rates. ………………………..probably….….$1700
      March ……,…..Electricity; Mazda insurance. ………. $1100
      April ……………Triumph Rego……………………………………$745
      May ……………………….
      June ……………Electricity………………………………….………$700
      July ……………….
      August……….…Rates; ………Probably…….……………..… $1750
      Sept……Mazda Rego; Float Rego; Electricity…….……$1400
      Oct. ………….Honda Rego;………………………………….…….$800
      Nov ………………….
      Dec; …………Elect; Honda/Triumph insurance; .…….. $1713

      Tells me when I’ll have things to pay, & that $280 a week into the bill paying will cover it, & most birthday & Xmas presents.

  7. 0
    0

    I pay all my bills on a fortnightly basis. In winter my electricity is $85 and in summer it’s $65. If I really wanted to ‘smooth out’ my bills, I could pay $75 a fortnight all year round, but I prefer not to.

    I also receive a very good discount for paying my bills on time without the company taking anything out of my bank account. Just recently I was able to ‘withdraw’ a sum of money from my discounts and forward payments to help me with new tyres for my car which wasn’t expected this year.

    The discount is way above 30%, and I don’t know where I could get that interest in any bank or term account with any bank.

  8. 0
    0

    I pay all my bills fortnightly and rarely get an amount owing. They are usually in credit by at least half the next bill. I have always done this but it is becoming a struggle to add more and more as the costs go up, while using less.

  9. 0
    0

    The above list should also include bills that some people may have due to their particular circumstances. They include: Council Rates. Car payments, Car insurance. Car registration. Household Contents Insurance. Body Corp levies. Hospital &/or Medical insurance.

  10. 0
    0

    This has a name? How cute. I always thought it was common sense. I could have made money writing a blog about bill smoothing!

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