How to handle a returned check from a customer or client

Many banks will run a customer's check twice in order to collect the funds and credit them to your account. In the event they are unsuccessful, your customer or client's check will be returned to you. You should have a procedure in place and an individual designated to promptly follow up on these returned checks. If the check is local and the endorsement has not been cancelled by the bank, one good method is to call the bank that the check is drawn on and see if the check is good.

Good days to make a call are Friday's and Monday's since many companies pay their employees on Friday. If the account has a balance large enough to cover your check high tail it over to the bank and get it cashed. If the endorsement has been cancelled or the check is not local, you should immediately call the customer and make arrangements for them to make the check "good" and pay any additional check processing fees that are stated in your policies or the engagement letter you have with your customer or client.

Writing a bad check in today's society is a serious offense and if prosecuted may result in fines and jail time, states Robert C Olivieri, Jr, a business owner since 1981. Do not leave your bad checks just laying around collecting dust. Take immediate action and get your money. You should also review the current status of this customer's account, such as open orders, current balance and late amounts to see if additional action such as halting shipments, a credit hold, or COD terms are needed.

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