For about a year, we were making additional principal payments on a loan. Then we received, at the same time, a late fee and a refund of our payment. The bank had changed systems and it rejected our payment because it didn't match. It didn't match because it included additional principal. We called the bank and tried again the next month. Again, our payment was refunded. So we started making the payment according to the invoice for several months.
During these months, we continued to work with the bank to make additional principal payments. The banker agreed to look into it and assured us we could make additional principal payments. We made two requests, (1) can we make payments on the first of the month to avoid late fees and (2) can we make additional principal? Here is the final answer from the bank,
[W]e need to be sure that our system has generated a billing statement each month before a payment is received. Otherwise, our system will not know how to process the payment. In your case, with payments due on the 23rd of each month, a billing statement will be generated and mailed to you on the 13th of each month. If you prefer not to wait until the statement arrives to you by mail, I recommend that we set you up on Business Online Banking. You could then go online on the 14th of each month, determine the amount of interest due, and then drop a check in the mail for the interest and any additional principal you want to pay. This should allow plenty of time for the payment to be received prior to the assessment of any late fee, which occurs 10 days after the payment due date each month.
Do what!? We have to wait till the invoice is cut on the 10th to know what to pay. It arrives in the mail between the 13th and 16th, depending on weekends and holidays. And payment must be received, not postmarked, by the 23rd. So we can't pay before the 10th or after the 23rd. And we have to change our system to adapt to your system.
The right answer is, "No problem, Mike. Please send us a check in the amount you would like to pay. We will take of the rest. We will take out the interest portion and apply the rest to principal. We appreciate your business. Let me know if there is anything else I can do for you."
This is what Steven S. Little, author of The 7 Irrefutable Rules of Small Business Growth, refers to as a Milkshake Moment. He loves vanilla milkshakes and it's the one thing that gets him through those difficult travel days. He experiments with customer service systems by ordering vanilla milkshakes when not on the hotel menu. He make great point in a humorous, memorable way in the above video.
Don't let systems make you stupid.