Electronic Check Recovery Saves Small Businesses Money
Almost as soon as you open your business and begin taking payments from customers, you’re bound to deal with a common issue: bounced checks.
Checks returned for insufficient funds cost businesses big time. Between the costs of goods and services that essentially go unpaid and the costs of collection, bad checks cost small businesses billions of dollars every year. Not to mention, the typical process of collecting on bad checks is cumbersome and time-consuming.
The Old Way of Dealing With Bounced Checks
Consider this scenario: Harriet accepts a check for $50 from a customer in her gift shop. However, when she tries to deposit the check, the check bounces. The bank returns the check to Harriet — with a hefty fee attached for accepting the bad check in the first place. Harriet is upset; not only is she out $50 for the cost of the items sold, she now owes the bank an additional $30. For a small business like Harriet’s, $80 is a substantial loss.
Harriet tries to get the money back. First, she calls the customer’s bank and explains that she holds a check drawn on one of their accounts, and inquires whether there are sufficient funds to honor the check. There aren’t, so she asks to have the bank hold the check for enforced collection meaning that as soon as there is enough money in the account, it will be paid. The bank agrees, but there is a fee for this service, so Harriet decides to take another approach.
She calls the customer directly and explains the problem. The customer promises to make good on the check – but doesn’t. Harriet then sends the customer a certified letter demanding payment, but the customer ignores it.
At this point, Harriet’s only possible remedies are to pay the bank fee for enforced collection, hire a collection agency, or take the customer to court for payment of the check and the fees. However, the fees for those actions would cost her more than the value of the check, so after several months of frustration, she gives up — and loses the $80, plus the time and money she spent trying to collect payment.
The New, Improved Way of Collecting on Bad Checks
Harriet spent a lot of time and money trying to collect payment on a bad check, but she didn’t need to. Had she used an electronic recovery agency, the agency would have converted the bad check into an electronic transaction and presented it to the bank again. Electronic recovery is more effective for collecting on bounced checks, because banks usually give electronic transactions priority over others, and the money is transferred immediately to the merchant.
Best of all, the merchant does not have to go through the cumbersome process of contacting the customer and the bank. In most cases, the electronic transaction is honored on the first try, saving the merchant time and money.
Bad checks cost small businesses millions, but they can recover what they are owed quickly and affordably via electronic check recovery. If you’re spinning your wheels trying to recover bad checks, contact Global Check Recovery for a more effective approach and protect your bottom line — and sanity.