Bad Checks

A check is not cash, but an “I.O.U.” or promise that cash will be paid upon presentation of the check at the writer’s bank. A check is “bad” when it cannot be redeemed for cash. 

Establish a firm check-cashing policy and post it where it can be read easily by customers and referred to by employees. 

This Policy Should Specify Your Acceptance Criteria Concerning the Following Information:

Amount of Check
Limit the amount for which the check may be written or limit it to the amount of purchase; require management approval for any check written in excess of a set dollar amount.

Two-Party Checks 
Two-party checks have a higher incidence of unreliability and can be more difficult to collect. 

Local vs Out-of- State Checks 
Local check writers are easier to contact for collection. 

Returned Check Fee
Collect a returned check processing fee, i.e. $20.00

Idenitification
The primary ID for collection purposes is a driver’s license or special ID issued by the state. 

Other Limits
Specify any other limits so they will be clearly understood by customers and employees.

 All checks should accurately reflect the name, address (mailing & physical), driver’s license or valid ID number, and home and work telephone numbers of the check writer. If this information is not accurately recorded on the check, the employee should write it clearly on the check. 

THE FOLLOWING SHOULD ALSO BE CONSIDERED: 

  • Name, picture, description, and signature match the check writer ID.
  • Written and numerical amounts agree. 
  • Correct date, not postdated. 
  •  Any erasures, alterations or abnormalities. 
  •  Low check number, new accounts can be less reliable. 
  •  Local vs out-of-state, use extra caution when accepting an out-of-state check, the writer should be a South Carolina resident in case they need to be contacted for collection.