Writing a bad check can happen to anyone, even those with good intentions. Of course, there will always be those people who intentionally try to scam someone that they’ve done business with. But your business depends on healthy and steady cash flow to help you run your operations without a hitch, and sometimes you may encounter a bounced check that needs to be dealt with. Collecting on bad checks is a must in order to obtain the funds you rightfully deserve and worked hard for.
Why do checks bounce? Here are just a handful of reasons.
Lack of Sufficient Funds
Not enough funds in an account is the most common reason why checks bounce. A check that is linked to an account that has less money than the amount written on it will most certainly bounce. There will also be a penalty to both the check issuer and depositor.
Sometimes the person writing the check believes that his or her paycheck will be deposited in time for the check to be cashed, but sometimes the money arrives a little too late. Other times, there never was enough funds in the first place. Either way, this situation forces you to have to deal with the situation so you get the money owed to you.
Problems With the Check Date
The date on a check is very important and any issues with it will cause the check to bounce. The typical problem with the check’s date can be that it is not legible, or is off by a few weeks. Checks are only valid for 3 months from the date mentioned in the date column. In this case, the bank will not honor the check.
Signature Does Not Match
Another common reason for a bad check is if the signature doesn’t match the bank’s records. The signature is a critical component of a check, and if it does not match the bank records, then it is very likely that the check will be dishonored by the bank.
Whatever the reason for a check to bounce, you will need to deal with it. Luckily, there are check recovery services you can turn to in order to help you get the funds you are owed.