How to Deal with Bounced Checks
How to Deal with Bounced Checks
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Home Page > Finance > Banking > How to Deal with Bounced Checks
How to Deal with Bounced Checks
Posted: Nov 16, 2011 |Comments: 0
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If your business accepts payment by business or personal check, then sooner or later you will have to deal with a bounced check. Here’s what you do when that happens.
1. Redeposit the Check
This could remedy the problem without any confrontation. Your customer may have over-estimated their balance or assumed that new funds were going to clear before you got to the bank. By redepositing the check, you give their money time to reach their account and to reach you.
Your bank may charge a fee for trying to deposit a bad check, so avoid this step if you don’t believe that re-depositing will be successful.
2. Call the Customer
A bad check may have been issued in good faith. If so, insist that the mistake be rectified immediately: overnight delivery of a bank check for the full amount, plus bank fees incurred, is the most common resolution. Remember to be polite and don’t imply any wrongdoing on their part. It could be an honest mistake and you don’t want to alienate your customer.
3. Submit to the Drawer’s Bank
Try taking the check to the bank upon which it is drawn. There, you can find out if there are sufficient funds to cover the check and cash it. This is a great way to allay any suspicions and have piece of mind. If you received a check, but are not sure about the customer’s ability to pay, then take a visit to a local branch.
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4. Mail a Certified Letter
Notify the customer by certified letter that payment is past due. If you need to take legal action to collect payment, a certified letter will support your claims. You should have already tried redepositing the business or personal check and calling the customer before you get to this step. The certified letter will serve as evidence if you go to court; and it may be enough to scare them into paying up.
5. Contact a Collection Agency
Collection agencies will work to recover your money for you, but will take a percentage of the money they recover to fund their services. This may be the best route to recover a good portion of your money without any further hassle for you. Make sure you know what percentage the agency will charge before you sign-up. Also be sure that you’ve exhausted all the other options. Once a collection agency gets involved, the matter can escalate quickly. Unless the sum is large, and you have no other recourse, think carefully before sending an agency after your customer.
6. File in Small Claims Court
You can file in small claims court without a lawyer. The time may be worth it if your customer has the funds to pay a judgment. Small claims court can lead to recovery of two or three times the amount in damages. Keep in mind that you will need a strong case in order to win in court and that if you lose you will likely have to pay legal fees. Make sure that you have all the necessary receipts and invoices and a copy of the check in question. Note: that if you can usually get copies of checks online if it has been through your bank; and your bank can also provide records of when they tried to redeem the check. Also, it’s good to have records of how you attempted to collect. Last, have a copy of your certified letter to submit to the court.
7. Call the Police
If you believe that the check writer knowingly gave you a bad check or transacted with you under fraudulent terms, then take the check and any information you have about its writer to the police. Accusing someone of a crime is a serious matter and our legal system is complex. Do not be hasty and understand that the police may take a while to act (if at all).
8. Have Strong Payment Policies
The best defense is to safeguard against bad check problems by having bad check fees and penalty interest for late payments in place. This will make most people weary of potentially writing you a bad check and will allow you recoup more money if you have to go through with collections or court proceedings.
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Chris Boulanger -
About the Author:
Bradford Exchange Checks focuses on the selling of personal and business checks at deep discounts versus banks. We also believe in helping people save money anyway they can. Buying checks online is one way to do this, but you can also find big savings by carefully managing your spending and understanding how you spend money.
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Is there a business banking facility in the Uk that has business managers with a financial limit over and above that of an office clerk? possibly one with forsight? or am I expecting too much ?
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Bradford Exchange Checks focuses on the selling of personal and business checks at deep discounts versus banks. We also believe in helping people save money anyway they can. Buying checks online is one way to do this, but you can also find big savings by carefully managing your spending and understanding how you spend money.
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