Avoiding Bad Checks by Michelle Dunn

Editor’s Note: When you open a home based business, you have a natural tendency to want to do things the “friendly way” and accept checks from folks and do business “on a handshake”…

That is until you meet the first person who gladly  shakes your hand and looks you straight in the eye and then writes a worthless check. Here are some GREAT TIPS and a great resource to help. The links to Amazon are affiliate links. Thanks for your support!

If you accept checks as a form of payment, remember that accepting checks doesn’t come without some element of risk.  Some businesses don’t like to deal with “bad” or returned checks so they don’t accept them as a form of payment.  That is one way to limit your credit risk in relation to checks.  Here are some things you can do to avoid getting bad checks:

·           Don’t accept checks – accepting checks is a privilege extended by you to your customer

·           Don’t let the check writer rush you.

·           Don’t take any check or person for granted – ALWAYS obtain proper ID

·           Don’t accept pre-written personal checks, at least the signature should be written in your  presence.

·           Don’t accept unsigned checks.

·           Don’t accept starter checks.

If you do decide you will accept checks, make sure to:

·           Check that the name, address and phone number are imprinted on the check.

·           Accept checks with the current date only

·           Compare the ID picture with that of the person cashing or writing the check.

·           Make sure the check signature marches the ID signature

·           Make sure the phone number is a working phone

·           Ask for a physical or street address if only a PO box is listed

Writing a bad check is a crime in every state, and is punishable by a fine and/or imprisonment. There are an estimated 450 million bad checks written every year.  This includes checks written without sufficient funds or upon accounts that have been closed.

Bad check laws do not apply when an individual stops payment on a check unless it can be proven that the issuer of the check intended to stop the payment on the check when he or she presented the check for payment.  Some states authorize the receiver of a bad check to collect a service charge to compensate for bank fees and/or any costs incurred as a result of receiving and collecting on a bad check.  Be sure to check your states statutes for the current fees or laws on what you can add to a bad check balance legally.

Michelle Dunn is an award winning author and columnist frequently featured in the Wall Street Journal, CNN and Forbes. She is the author of “The Guide to Getting Paid, weed out bad paying customers, collect on past due balances and avoid bad debt”, available here…