Automatic payment *after* payment due date: why?

Question

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.

Answer 1

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.

Answer 2

"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.

Answer 3

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.