When a client writes you a check, a valid payment should be expected. However, when that client is a business, money may be constantly moving and out of their bank account. When this happens, there may not be enough money to cover the check. But while a bounced check is certainly an inconvenience, it doesn’t necessarily have to be considered a financial loss. To help you address this common problem, here are a few accounts receivable management tips for dealing with a rubber check.

5 Possible Ways to Deal With a Client’s Bad Check

1. Contact the Client Immediately

As soon as you’re aware of the bad check, contact the client and alert them of the problem. There may be issues with their account that they may not be aware of, and your notification could help resolve them. It’s also a good opportunity to find out if they want to pay by another method—such as by using a company credit card.

2. Talk to the Bank

If you have trouble reaching the client right away, consider calling the bank attached to the check. In some cases, the account holder may have protections that allow the bank to cash the check. Addressing the issue with the bank can also prevent them from levying fees against you.

3. Apply Fees

When your business accepts this form of payment, it’s a good idea to have a written policy that applies fees for bounced checks. In addition to covering losses, this penalty can discourage clients from hastily writing checks without checking their account balances. If a check does bounce, your policy will provide the evidence you need to submit a demand-for-payment letter that requests the original balance plus the fee.

4. Hire a Collection Service

If your client is not responding to your communication attempts and the bank is unforgiving, you may need to hire a collection agency as a last resort. These third-party services will employ smart strategies to locate the responsible party and pursue debt collection in a legally compliant fashion.

5. Outsource Accounts Receivable Management

Even if you can resolve a bad check, there’s no promise that you won’t run into the problem again with a client. Fortunately, you can minimize these risks by outsourcing your A/R responsibilities to a third-party provider. These professionals will develop detailed strategies to prevent bounced checks—such as by outlining clear payment terms with the client.

No matter what the outcome, bad checks are always a burden for business owners. Fortunately, you can avoid these financial headaches by outsourcing these matters to Joseph, Mann & Creed. Based in Twinsburg, OH, this agency can assist with B2B debt collection as well as provide accounts receivable management support. Whatever the needs of your business, you can count on this team to resolve issues legally, minimize losses, and maintain positive client relationships. Visit this collection agency online or on LinkedIn to learn more about these services or call (216) 831-5626 to discuss your A/R practices with a specialist.