Aside from being a logistical headache, bounced customer checks levy a significant expense to small businesses in terms of both time and money, and these costs often go way beyond the actual face value of the check.
As economic recovery continues at a snail’s pace, and consumer dollars are stretched ever further, the occurrence of bounced checks will likely rise. So what can you do if you suddenly find yourself holding a handful of bounced checks? Actually, quite a lot.
Bounced Checks, A Ripple Effect
Bounced checks are expensive. Bankrate.com recently reported that the average bank charges a hefty $27.04 for dealing with a bounced check. Then there is the time factor. A bounced check requires staff members to spend time tracking down the customer in order to illicit payment. Finally, bounced customer checks can also wreak havoc on a small business’ cash flow, creating an uncomfortable situation where anticipated money is so close, yet so far.
Reducing the Costs of a Bounced Check:
Bounced checks are inconvenient to deal with but fortunately there are several things small business owners can do to help minimize the impact and occurrence of bounced checks as well as increase the debt collection rate:
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Use a collection agency. You can sell the debt to a collection agency that will take on the responsibility of collecting the amount owed from the customer.
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Use a check verification system. At point of sale, it is possible to compare the signature of the check you are receiving against a national database of people who have written checks, and have not made good on them, and if the name comes up you can insist on another method of payment.
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Get bank notification the first time a check doesn’t clear. Normally a bank will try to clear a check twice before alerting you. Instead, you can opt to have your bank to tell you after the first attempt so you can communicate with the customers bank to see if they have funds available to pay you. If they do you can redeposit the check.
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Electronic Check re-presentment. After a check has failed to clear twice, you can check with the customers bank to see if funds are present, if they are then you can electronically debit the check and receive the funds