Even with the best credit policy in place it is inevitable you will get a bad check now and then. The question is what should you do when a check is returned for non-sufficient funds (NSF)?

Frist, it’s important to be knowledgeable about the bad check laws in the state(s) where your company does business. You need to know how and when to contact bad check writers, as well as the time they are granted by law to respond. You should also be aware of the limits on the service fees you can assess.

Second, establish a good relationship with your bank. Arrange to be contacted immediately if a check is returned, or have the check deposited again as a standard practice.

Third, make sure your company has a policy of how to deal with NSF checks. If you don’t have a policy in place it’s time to write one.  Below are some steps to consider when dealing with NSF checks:

•Send the check through a second time.
•If the check is returned again, consult the appropriate state laws.
•Write the debtor a letter requesting payment within the time required by state law and send it certified mail.
•Assess a service fee within allowable state limits.
•If you fail to receive payment, contact the county or municipality where the check was received.
•If the amount owed is sizable you may want to consult with your legal department or an attorney. You need to decide if the issue is worth pursuing in court.
•You could also turn over the account to a collection agency.