Most businesses accept checks as form of payment for goods and services. However, accepting checks can be a risky endeavor if your company doesn’t follow good policies and procedures for preventing loss from bad checks. In fact,
reason some businesses do not accept checks is because of a history excessive “bad checks” that costs their business to much money and aggravation, preferring to accept only cash and credit cards. Whether a business currently accepts checks or not, they can minimize cost of accepting checks to less than 1%, which is less than half 2% to 3% cost of credit card processing. The only payment method cheaper is accepting cash. Outlined below are tips for formulating your virtually risk free policies and procedures for accepting checks. For purposes of this article, “virtually risk free” is defined as achieving a cost to accept checks of 1% or less. Not all items will apply to all businesses but if you determine that accepting checks in your business is “high-risk”, a more stringent program using more of these tips is needed. In any case, your policy needs to be in writing, distributed to all employees, and followed without exception.1. Clearly defines acceptable forms of ID, required information and dollar limits. Post these requirements where customers can see them at point of sale.
2. The check-writer's name and address should be pre-printed on check. Ask for and write phone number if it is not pre-printed on check.
3. Make sure written and numeral amounts correspond.
4. Watch check-writer sign check. If name is illegible, have customer print name below.
5. Compare signatures, photo and physical description from ID with that of check writer.
6. Verify that ID is still valid! Check driver's license for signs of alteration or modification.
7. Most returned checks have low check numbers (100 to 500), which indicates a new account and therefore a more risky check, particularly for business or "dba" (doing business as) checks. Do not accept starter checks. Any number under 300 should be a “red flag” and require a manager’s approval for acceptance
8. Never take business checks from individuals unless you know business and individual. Business checks are not presently eligible for electronic re-presentment. With available software, virtually anyone can produce a business check.
9. Do not accept checks with PO boxes…always get a street address for check-writer.
