When running a business you have a variety of concerns to keep in mind, from managing relationships with your suppliers to keeping your customers and clients happy. But one frustrating issue that arises from time to time is a problem getting payments from business clients. Just because a business writes you a check doesn't mean that it's guaranteed to clear. If you find yourself in a situation where a business writes you a bad check you have a number of ways to seek recourse.
The first logical step to dealing with a bad check from a business is to call the company to inquire about the problem. Explain the situation — it could be a simple case of an oversight or accounting error at the bank. Ask for a new check that includes your fees from the inconvenience. If you don't think that the company is trustworthy, request a different form of payment, such as a credit card payment or cash instead of a check.
If the company does not provide you with your payment and the money you lost as a result of the bad check after you've attempted to contact them about it on more than one occasion, you may decide to take the situation to another level. You can file a small claims case in the county where the company does business for the amount due including fees. In some cases, the company will choose to settle with you out of court to avoid legal expenses. As financial writer Liz Pulliam Weston explains, you have three opportunities to get a judgment from a company in small claims court — by default, by settlement or based on your proof and evidence.
Report to Business Credit Bureaus
If you have the company's tax identification number, address and other business information, you can also report the offense to a business credit bureau. Business credit bureaus like Dun & Bradstreet and Experian Business maintain information about commercial companies, including trade credit accounts. A trade credit account is a business-to-business (B2B) supplier or vendor arrangement. While reporting to the credit bureau may not get you the money you lost from the bad check, it is a way to warn other vendors about the company's payment practices.
Depending on the amount of the check that bounced, you may choose to write off the debt and move on. If so, your best bet is to learn from the experience and take preventative measures to avoid this situation in the future. For instance, you can require new clients to pay you with a cashier's check or money order until you're comfortable with accepting business checks from the company. You could also require credit card payments from customers. Finally, order a business credit report for the company before accepting a check.