Imagine this: You work day and night to convert a client, craft a convincing sales pitch or bring in an investor. It took months of hard work and research to even find a possibility of long-term success as a rising business. Yet, when you go to the bank to deposit the cheque you earned with sweat and blood, it bounces. Isn’t it frustrating and disappointing? With the kind of backbreaking work that businesses demand, none of us want to be a witness to this situation. Yet, in the UK alone, there was a loss of 20.4 million British pounds in 2018 over cheque fraud losses.
Businesses fall into the trap of bad cheques not only by the new deals but also by the years’ old clients, the money thus hanging in the balance. However, it is always better to calmly figure out this problem rather than rushing it to the court. Mostly because going to the court might make your argument legit and legal, but the liability would still fall on your business for debt collection. So how are you going to do it? Here are a few ways to begin with:
Go where it all began
A bad cheque bounces at the bank directly and only a bank can help you out with a plan of action. However, contacting the bank does not mean trying to deposit the same cheque multiple times as there is an upper limit to the number of cheque bounces and fee charges for the same. Now, when you are already in the crisis, you can’t afford to have a canceled cheque in hand.
Now dial the bank customer care and talk, gather information if the respective account has funds or did it get deposits after the cheque got bounced. If needed, elaborate and ask the bank if they can help you out with the enforced collection process. This way, you will know your current status and will be able to figure out your further course.
Don’t beat around the bush
It would be a fool’s mistake if you talk to everyone about the bad cheque but your customer. Bad cheques don’t always happen because of defaults or frauds, there can be genuine errors. Ask your customer about the cheque, maybe suggest a direct online money transfer or request for another cheque. Don’t forget to be polite and give your customers the benefit of the doubt. However, be clear with your intent and don’t postpone this conversation.
Send a written request
If the call doesn’t workout, the next step would be to send in a certified letter. The letter justifies the final date of payment of dues and should be backed by a receipt. Infact, keep a copy of the letter and receipt with you before mailing it to the customer.
This adds a plus on your side since it is a written proof of a problem that you can also use in court if the need arises. Moreover, this informs the client about the gravity of the problem and acts as an official notice from your business.
Contact a lawyer who can support you
As a business, you can contact your local district attorney if you want legal help. By legal help, it does not mean a court filing or hiring a lawyer but more of a legal push. A D.A. will simply contact the customer once for payment and warn the client about prosecution on your behalf. If things don’t work out, it would be your green light to set things moving for a court hearing. However, the D.A usually takes help from debt collection agencies to carry out the process on its behalf, which makes the process more vigilant and the outcome positive. You can find more about the process of debt collection agencies here.
Leave it to the experts if needed
If none of the above-listed points seem to work out, you can always hire a debt collection agency. They will take over the entire process, not distracting you from your primary business. Moreover, their compensation is in the form of a percentage of the debt collected. Trust me, it is a better bet than losing out on the entire money.
Along with that, debt collection agencies specialize in this pursuit, boast vast databases on companies and can be hired for your usual course of business. To have a back-up is never an issue, especially when you find your hands tied and there are no options to exploit. With 8513 debt collection agencies just in the US, as of 2015, you will be spoilt for choice.
We understand the pain of spending time and effort in collecting the money that you have earned by your patience and ideas. However, even though the wait makes it worth it, one has to be smart enough to understand what benefits the company. Is it going to court, is it approaching the client or is it vouching for a third party? Pick your best at realizing the debts, doesn’t harm the business reputation and has low costs.