What to Know About Accepting Checks for Payment

Checks are referred to by legal bodies as conditional forms of payment. This means that the writer of a check asserts that he has enough money in his bank account to cover the sum required. The receiver of this piece of paper must decide whether or not to accept this assertion. He must also decide if the check being handed over is the legal property of the customer. There are several ways to protect your business when accepting checks for payment.

Why Accepting Checks for Payment May Not Always Work

First of all, lots of retail outlets simply are not accepting checks for payment under any circumstances. This is especially true in big cities where people do not know each other. Do not expect to walk into a big urban center and buy goods at a:

• Grocery store
• Gift shop
• Clothing store

In these instances, credit / debit cards and cash are the accepted forms of payment. A stranger who offers a check will most likely be denied as he has no history with these people.

Hotels typically expect clients to leave a credit card with them at the front desk as security, or at least a credit card number.

The Trouble Associated With Checks

The trouble is that it is too easy to write a check but to have insufficient funds in the account. The business pays the NSF charges, which must then be sought from the client after the fact. Hunting down this money is a waste of time and resources, assuming the money will even be recovered. When someone is in heavy debt to lots of people, restoring $20 or even a $100 to a provider of goods or services is probably not a priority.

Also, checks can be stolen or forged. If you are going to accept them, ask for a piece of photo identification which shows a signatur accepting checks for paymente. Make sure the client signs his or her check in front of you. Look the check over, making sure nothing appears to have been altered.

Who Will Accept Checks for Payment?

Service providers accept checks. Utility companies accept them. Local businesses will take checks from customers they know. If there is a regular relationship between client and company, security is founded on familiarity. This client has a reputation and lives in the area where developing a negative reputation would be ruinous to him or her, or at least embarrassing. You can disappear from a big city, but not from people in a small town.

These firms will also be looking for certain details. They would naturally want to see that the check is endorsed by the person it belongs to. They will go as far as to ask for a driver’s license. A driver’s license number will have to be written on the back: banks and insurance agents expect as much before accepting checks for payment.


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Matthew Hunt has been helping small businesses get set-up with Canadian Merchant Account Services since 2007 and helped 1000's do so. Join Matthew on Google+.

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