What to do when a client's check bounces
It can be very frustrating when a customer writes a bad check and then they avoid contact with you. Bad checks don't happen all the time, but there is the occasional client who writes a check that bounces. So, what do you do when a client's check bounces?
There are a couple of things that you can do when a client's check bounces
Run the check again.
Run the check through the bank a second time. It is ok to double check to make sure that the transaction was done properly. Some call the bank first before making the second deposit attempt. If the check bounces again, it's time for step 2.
Contact the client.
Place a courtesy call to your client or the person that wrote the check. Leave one polite message asking that they take care of the bounced check as soon as possible. They can either pay it with cash or a cashier's check. Give them a week to reply and then leave a message that lets them know that you are calling about the check they wrote you that was returned. Let them know that you have left a message already and you are following up on it.
Write a letter.
If the person that wrote the check is non-responsive, send a certified letter stating the check was returned and for what reason and that the party has 10 days to provide a cashier's check or money order for the appropriate amount. Act as fast as possible because the longer you wait, the tougher it is to collect.
Contact the bank.
If the bank is convenient, you can go to the bank daily and see if there are funds available in the customer's account to cover the check. Unfortunately, if you have incurred any bounced check fees, you won't get a refund for those, however, at least you will get the cost of the product covered.
Take them to court.
Another option is to pursue client in small-claims court. You can do this without a lawyer if the amount owed is within the court's jurisdictional limits, which is $4,500. Make sure first if it is going to be worth your time. Even if the ruling is in your favor, the ultimate recovery still may take a long time. Small claims courts can be very time consuming and not worth the headache.
Some good tips to keep in mind:
Before doing business, don't be afraid to let customers know that you have a bounced check fee. All businesses do and you need to make sure you cover your costs. A good guideline is to charge what your bank charges plus $5.00 for the hassle involved. Make sure to have credit policies that are clearly stated and explained to your clients. Interest on penalties, bad check fees and personal guaranty requirements are critical.
Make sure to always send invoices the same day that the products are shipped and checks are deposited the same day that they are received. This will ensure that you stay on top of you're your finances. Make sure to be educated on the process the bank clears checks so that any un-cleared checks from the same client do not continue to accumulate.
When doing business with anyone, you run the risk of dishonest people and the chance of being cheated out of money. Bouncing checks is highly illegal, but unfortunately it does happen. Remember and follow these steps on what to do when a client's check bounces and you will most likely cut down the number of times it happens. These steps will ensure that you quickly and professionally handle this situation in the best possible way.