5 Steps Toward Recovering a Bad Check - Collection Management Services

Businessman Writing Check

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Every once in a while, your business will be faced with a situation involving a bad check. Some businesses have given up on checks because it can be a hassle to collect money from bad checks. For the businesses that still accept checks as a valid form of payment, there are still relatively hassle-free solutions that can help prevent the chances of receiving a bad check. When the occasional incident occurs, Collection Management Services is here to remind you that a few simple steps can bring you one step closer to collecting what is owed to you.

1. Make sure your check policy is visible.

When your customers enter the door, they should be notified of the contract they enter in with you when they write a check. The bad check policy can be posted near a cash register or on the company website to inform customers of any fees that will be charged due to a bad check.

2. Notify the customer.

It may help to ask your customers to write a phone number on the check to ensure that they can be contacted in the case of insufficient funds. This is a non-confrontational and easy way to contact the customer initially before any further action must be pursued. Additionally, you should record the check writer’s license number on the check before accepting payment.

3. Send a letter demanding payment.

This is the first step to protecting your company during a criminal prosecution if a customer is intentionally defrauding you. Make sure to include a return receipt with the demand for payment.

4. Call the bank and see if the check was made good.

Sometimes customers will make a deposit after a check bounces. You can inquire about the status of a customer’s account by calling the bank and asking whether or not there is enough in the account to cover the dollar amount. If there is enough to cover the bad check, take the check to the bank and cash it.

5. Contact a collection agency to help you collect the amount owed.

Though small claims court is an option for bounced checks, the hassle can often outweigh the potential benefit. A collection agency can help you minimize your personal involvement in the process so that you can avoid having to testify in person.

 

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