NSF Checks

Hi,
NSF checks used to be one of the biggest collection problems for both large and small businesses. This situation has dramatically changed due to the introduction of computer verification technology at point of sale. It has reduced the number of NSF checks by 80%. From a collections standpoint, it is important that each check contains as much information as possible about the customer. There various methods that can be used to collect an NSF check.
1) Notify the customer immediately by phone and or mail that his or her check has been returned by his or her bank and that the matter needs to be immediately resolved.
2) Most banks redeposit checks twice and then return them to the depositor if they are still NSF. The depositor can still present the NSF check at the debtor's bank and get the check processed. This takes care of the people that inadvertently wrote an NSF check and for extraordinary reasons did not have expected funds at the bank. Going to the debtor's bank allows the merchant to resolve the issue without further involving the debtor.
3) Each state has different laws governing the penalty for issuing NSF checks. Merchants need to know the laws applicable in their state. If the debtor has not responded to previous communication, a letter should be sent stating that the merchant will be exercising the rights given under the applicable law to collect on the check. It should be spelled out for the debtor.
4) If no payment has been received after exercising these remedies, the check needs to be turned over to a collection agency.
Following these steps in a timely manner increases the chance of recovery on NSF checks.
Tomorrow I'm going to talk about collecting on car loans and car repossessions.
Until then,
Alan