Developing a Check Acceptance Policy

Developing a check payment policy and backing it up with appropriate services
By Trisha Schulz When conducting business, it's a good idea to set up guidelines or a check acceptance policy when taking payments in that way. Accepting checks can be risky, as you're not sure if the funds are as good as the paper the check is written on. A well-written check policy can help in protecting your business from those checks with insufficient funds.

While a policy for paying by check is good, you'll also want to make sure your employees are trained and vigilant in adhering to the policy. Check verification and recovery services can also strengthen your policy.

Consider the following facts for your check acceptance policy:

1. Your check acceptance policy should include the customer's showing of a proper photo ID. That way you can confirm that the check writer's identity matches the data written on the check.

2. Many businesses have adapated a policy for paying by check that excludes the acceptance of those checks written on new accounts.

3. Check acceptance should also depend on the check writer's bank location. Many businesses do not take checks from out-of-state banks because it can be more difficult to recover funds if going that route becomes necessary.

Review check acceptance practicies and policies from other companies

Combating check fraud starts with a well-developed check acceptance policy. Be sure to research current check fraud schemes used and browse other company check acceptance policies. While some policies may be more stringent than others, you can take the nuts and bolts of a sample policy and then bolster it to make it your own.
Try:  Read through the check polices of ProTech Computers and the Potomac and Rappahannock Transportation Commission.

Use a check verification policy through a professional service

More than 3/4 of all merchants use a check verification service from a third-party vendor to pre-approve checks. Advanced technology can even provide for approval or denial at the point of sale terminal.
Try:  Check out the check verification services provided by ACH Payments or InfoMerchant.

When accepting checks, keep a check recovery system in place

When it comes to collecting on bad checks, it can be difficult at times. Most of the time, businesses are out the money entirely. If the merchant acts fast, collections can be succesful. A number of collection and recovery agencies exist. Make sure to check on the agency's reputation with the Better Business Bureau before contracting their services.
Try:  If you bank with Wachovia, you may be entitled to their free bad check recovery service. Check out the automated check collections and check recovery service offered by Electronic Clearing House.

• Check acceptance procedure should include a way to note which employee or cashier received the check. That may prove to be important if the fraudulent check writer is ever charged with the crime of issuing a bad check.