Creating a Check Acceptance Policy

Check-screening methods to reduce risk and ensure payment

Accepting checks as a form of payment can be risky business. People occasionally write a check when they don't have the funds to cover it. Even more dangerous to small businesses are identity theft and check kiting, in which thieves knowingly attempt to pass bad checks. This can leave your business with devastating losses.

To protect your business, implement a check acceptance policy that:

1. Confirms the identity of the check writer.
2. Verifies the checking account is active.
3. Makes sure funds are available from the account.
4. Provides insurance for bad checks or a recovery plan.

Confirm check-writer identities

One of the first lines of defense in check fraud is to make sure you verify the identification of check writers. The rule of thumb should always be no checks accepted without a valid photo ID. Take the guesswork out of determining if a photo ID is valid or a fake with an ID scanner.

Choose the right equipment

Technology allows you to verify that your customer has a valid checking account with available funds within seconds. Set up your point of sale systems with check scanners to transmit account information electronically to check verification systems.

Verify funds availability

Check verification companies instantaneously provide authorization when you scan a check through the reader. The systems work much like credit card authorizations by confirming that the checking account is open, in good standing and has available funds.

Accept checks online

Accepting checks online can seem like a risky venture since the customer isn't in your presence with a photo ID. But today's technology has found a way for you to accept payments in the form of checks with minimal risk. By adding html scripts to your website from online check processors, you can accept checks over the Internet in printed form to your bank, or automated clearing house (ACH) transactions. 

Train your employees

Make sure your entire staff knows your check acceptance policy and follows it consistently.

• Make sure the address on the check and the writer's driver's license match. Many times people move and don't update their driver's license. Also ask every check writer if their current address is printed on the check.
• Always confirm that the printed amount and the numerals in the payment match. Oftentimes, an honest mistake is made, but when the bank receives the check, they will always honor the written number rather than numerals as the payment amount.
• Ask your employees to circle the amount, address, date and signature on the check to confirm they have checked it. Make sure your bank allows you to write on the check before you do it.
• Some businesses require a credit card number for backup on large payments. Before you ask for credit card numbers to insure a check, make sure it is legal to do so by calling your county district attorney's office for local or state laws regarding acceptance of checks.

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