subject: 6 Tips To Spot 'bad' Cheques [print this page] How easy is it to tell if the cheque you receive will be honoured at the bank? Before you accept any cheque take a few moments to make sure you've got the real thing. Debt collection is not an easy or pleasant task and allocates resources away from your core business. Therefore, paying attention at the point of sale can go a long way to ensuring the cheque is valid and will therefore be honoured. Some useful tips to eliminate the chances of receiving a 'bad' cheque include:
Identification
If the cheque is from someone you haven't dealt with before make sure you ask for some form of identification. Sounds simple enough but an easy one to forget if you're caught up in making a sale. Identification with supporting photograph is always preferable, something such as a driver's licence.
A passport is obviously ideal and should be offered by anyone that doesn't hold a driver's licence. Most people will have some form of photo ID in their wallet.
Post dated cheques
Any cheque that is dated in the future should not be accepted. If you do, you are relying on someone putting money in their bank account in time for the cheque to be honoured. Anything can happen between when they leave your store and go to the bank. This is just not worth the risk. Debt recovery agencies receive find that a large proportion of referred debt comes from bad cheques being presented.
Signatures
Make sure the cheque has been signed and check the signature with some other form of identification. If a cheque has two lines for signatures this usually means the bank requires two signatories.
Errors and corrections
Errors or corrections of any kind should also be initialled by all signatories of the cheque.
Obvious corrections, words and dollar amounts with a strike through line but without initials could mean the cheque has been stolen or is being misrepresented.
Change in pen colour or style
Any variations to pen colour or style of pen could be a sign there is something wrong with the cheque. Query with the customer and judge by their response. If you're not sure don't accept the cheque.
Other checks for cheques
Make sure the amount in figures matches the amount in words.
The payee name should be the same as your bank account name.
Reputation of customer
The reputation of the customer is also a crucial element in determining whether a cheque is likely to be dishonoured or not. If the customer has a positive reputation or you have had positive past dealings, it is less likely their cheques will be dishonoured compared to new customers where you have either had no past dealings or any idea of their credit reputation. A simple credit cheque can always assist in determine the 'credit worthiness' of customers.
Counterfeit cheques are hard to spot but being familiar with different banks and how the cheques should look may help you decide if you are faced with a cheque that doesn't look right.
Ideally anyone wanting to pay by cheque should make prior arrangements with you and write the cheque out in front of you. This is a little more difficult if two signatures are required or you are dealing with larger type companies/businesses that send cheques in the post. However, by simple using commonsense and spending a few moments analyzing the cheque can go a long way in protecting yourself if you are going to accept cheques to avoid future debt recovery hassle.
