If you are still collecting checks in-house using traditional letters and phone calls, it is time to stop chasing down money you have already earned. Today, savvy merchants outsource collections to a service provider that combines electronic technology and traditional methodology.
Electronic collection recovers NSF checks written on open and funded accounts by electronically debiting funds directly from the check writer's account. Traditional collections send letters and make phone calls on accounts that are depleted, closed, or fraudulent. Combining the two methods make for a strong safety net against bad checks.
Electronic collection of NSF checks appears to be an easy, straight-forward process, but don't be fooled. While there are a few equitable recovery models, the majority result in excessive bank fees for your customers.
Most service providers electronically debit accounts in the blind without first confirming sufficient funds to cover check amounts and return fees. If the funds are not there, check writers are hit with more overdraft fees.
Confirming that your customers actually have money to cover their bounced checks prior to debiting their accounts will result in less bank fees. It also frees up money for your customers to resolve their retail debts rather than bank debts.
How do merchants decide which collection providers are the most effective and equitable? Before signing an agreement, consider some food for thought:
1. Do they call the check writer's bank to confirm funds before electronically debiting their money?
2. Can you review images and status of the returned checks online?
3. Do they manage both electronic and traditional collections?
4. Is there a register, email or fax alert system to stop repetitive check bouncers?
5. Do they provide employee guidelines for reducing bad checks at the POS?
6. Is the client services team readily available and are they resolution specialists?
7. Do they put their toll free number on the check writer's bank statement to differ calls away from your business to theirs?
8. Have you called their toll-free customer number with a problem to see how they respond?
9. Are the collection reports customized for specific business needs to include tracking options for store location, repeat offenders, or effective employee efforts?
10. Do they provide check policy notifications at the POS and entryway?
11. Are they endorsed by any reputable Business Associations?
12. Do they have an AAP Member on staff?
13. What is their BBB rating?
14. What is their reputation in the payments industry?
After reviewing the accumulated information, if you genuinely value customers and their loyalty, I encourage thoughtful consideration before making a decision. One last suggestion: if you do find a payments provider who is more interested in your bottom line than theirs, hire them on the spot!
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