While many customers do prefer to use debit cards, there are still those that prefer to write checks. As a business, you can greatly improve sales by accepting a number of payment methods. However, there are guidelines you need to consider to protect your business. The following are a few tips on how to set business policies for accepting checks as payment.
Common Guidelines
There are several common guidelines to consider when accepting checks through your business. First of all, it’s important that checks only be accepted if they are from a local or in-state bank, are written for the exact amount (or a lower amount if the customer is paying with two methods), and are not starter checks. You must also deposit checks in a timely manner as some banks do not accept checks that are dated back six months or more.
What Employees Should Look For
When accepting checks, there are a number of things employees need to look for. A check must be dated, the numeric and written totals must match and be accurate, the pay to section must include your business’s name, there must be routing and account numbers on the check, the check must also be personalized to include identifying information of the payer, and the check must be signed and checked against a photo ID.
Verifying Identification
It’s extremely important that the identification of the payer be verified. Failure to verify identification could result in loss of income and possibly result in being sued for not following through with verification practices. The check can be verified by matching the photo ID to the person writing the check and also comparing the signatures on the ID to the one of the check. When in doubt, you can contact the payer’s bank for verification.
How to Avoid and Handle Bounced Checks
Bounced checks result in lost income. That’s why every business must do what it takes to protect themselves. Thankfully, there are services business can subscribe to that will check a database to determine if the payer has written bad checks in the past. This will automatically deny the check and save you from lost income. If you do have a bad check come through, you can ask the bank to run it through a second time. In some cases, the funds may be there on the second try. If the check bounces a second time, your only options are to give up or take the individual to small claims court.
A Note About Dissatisfied Customers
It’s important that you realize that customers can stop payment on a check if they are dissatisfied with the service or product offered by your company because it did not live up to expectations. By law, customers may be entitled to a full refund or owe a reduced amount.
Accepting checks can be good and bad for your business. While it can be good for businesses to accept a number of payment methods, checks can bounce. The key is to have policies in place to help protect your business from bad or fraudulent checks.
About the Author: Carey Kutchar is a small retail business owner who hesitated to accept checks when she opened her doors. She uses Kabbage.com’s small business loans to get started and uses high-technology check scanning systems to protect herself from check fraud.
