I read an article from bloomberg.com that the Pentagon has paid a small South Carolina part supplier $20.5 million dollars in freight cost over the last 6 years and it was overlooked because they have an auto-payment system that pays suppliers as long as the orders are deemed high priority.
My first reaction was stated in the second half of the title “Why doesn’t the Pentagon use FedEx and ask the suppliers to use their account for shipping“?
As I thought about this more, all of these automatic bill pay that I’m enrolled in is basically the same thing as Pentagon’s auto-payment system. Right now, I’m basically automatically paying off my credit card bills, and to be honest, I don’t look at every line of every statement ever since everything became electronic and automatic. Could someone overcharge me for something? Of course they can. Will it get through without me noticing it at this point? Possibly.
I’m sure a $20.5 million pack of bubble gum will not go unnoticed but there is a big risk here because of my trust in this automated system (or really because of my laziness). By not reviewing every line item of my credit card and making sure that there is no discrepancy, I leave the door wide open for croaks to overcharge me. I’m not suggesting that people will purposefully overcharge me, but accidents do happen.
Therefore, I really need to review my finances from now on. My longest bill is the credit card bill, so I will start review this on a monthly basis to make sure there are no hidden charges that I don’t know about. Furthermore, I will also check the transactions of all my accounts (bank, taxable stock accounts) to make sure that there are no discrepancies from now on. Doing this should reduce the risk that I am overcharged. Along with my budget report, doing this should also help give me a better handle on where I’m spending the most money.
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{ 5 comments… read them below or add one }
I’ve caught some major errors before by just checking over my auto pays, it definitely benefits the end user to be diligent. With convenience comes greater risk, I agree.
Auto bill pay is a scary thing. However, I also use Quicken and enter in all my purchases for each card and bank account. I then sync with my online account to verify the purchases match up.
I definitely recommend tracking each purchase in some type of software (quicken, money, or some freeware apps). When the bill comes in, reconcile manually or automatically with your own records to confirm the charges are correct. I’ve had some fraudulent charges caught even before I got the statement thanks to the syncing I do.
Modern Worker: Thanks for the reassurance that the extra time it takes to do all this helps. I get so many bills that it takes considerable time to review everything line by line.
Clever Dude: I guess I might have let go quite a bit of money by not checking them since you guys are telling me that you’ve caught fraudulent charges before. Oh well, the important thing is what I do from this point forward.
..Your money looks better in your pocket than someone else’s. Keeping track of this stuff will pay you big dividends down the road..
Michael Fultz: Well said