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Keeping Checks in Check
One of the biggest nightmares of too many businesses is taking a check that doesn't clear. Re-submitting checks, expensive bank fees, loss of revenue, and personal confrontation with patients are all part of the nightmare for a clinic. Sure, there are laws to protect a business and allow them to prosecute "check bouncers," but most clinics seldom use the full extent of the law. Normally a patient doesn't intentionally bounce a check and full prosecution is expensive, time consuming, and usually futile.
According to the National Automated Clearing House Association, there are slightly over 1,000,000 bad checks written each and every day in this country. That's over 22 million per month! In addition, 92 percent of businesses are losing money because of the way NSF check recovery is handled. With statistics like this we might just be tempted to say, "Forget it, cash or credit cards only."
Let's take a closer look. Most people don't like to pay cash for services -- especially medical or dental services. They want that convenient paper trail for tax purposes afforded by the check writing process. Granted, you give patients a receipt and that can serve the same purpose, but people are used to the comfort level of tracking their checks.
Cash isn't a viable option either. Many people are uncomfortable carrying large amounts of cash even for short periods. Again, if we look at statistics, Americans carry an average of $20 in cash, far less than people from other countries do. There's no need to carry large amounts of cash when we can pay with a check, and ATM's are close by when we need to replenish the reserve.
What about credit cards? Everyone has one, right? Wrong! The National Clearing House estimates that less than 50 percent of the American public has a credit card, and of those who do possess one, less than 50 percent use it. There are several reasons for this.
First, most people who have used credit cards are shocked at the high interest rate attached to them. They start out low enough to entice you, and then quickly jump to 18-25 percent. Soon you realize you will never pay off the principle. Consumer's Report indicated it could take 30+ years to pay off a maxed out card if you are only paying the amount due.
And speaking of reaching card limits, this is the second reason people aren't using their card. A large percentage of them are simply maxed out. They may still use it to reserve a hotel or motel, but they make it clear they will be paying the final bill with a personal or travelers check.
Finally, there are the people who use a credit card only for actual emergencies. These people are usually conscientious, and use them only when absolutely necessary -- to reserve a rental car, for example. Even then, they will pay by check if possible.
So, we're back to accepting checks. But does this mean we have to join the ranks of the 92 percent of businesses losing money on them? Probably not, but it is important to know how the check processing system works, and how we can get it to work in our favor.
The usual process works like this. You accept a check from a patient and deposit it into your account. Your bank then presents the check to their bank for payment. If sufficient money is in the account, the transfer is made. If there isn't enough money in the account to cover the cost of the check, both banks "bounce" it and assess allowable fees. Your bank will only present the check twice as allowed by law, and then debit your account. In addition, you may be charged a second time for this "service." Finally the NSF check is returned to you, and you now have the responsibility for collection.
Is there a better way to process checks? You better believe there is. It's a unique service called Check Collect™, and it works like this: Your bank submits the check to the patients' bank for payment. If there are insufficient funds, your bank immediately forwards the returned check directly to Check Collect. Check Collect enters it into a database and re-submits it electronically.
If it still bounces, the Check Collect computer system establishes a call system to the banks' computer. Because it uses a unique electronic process allowed by the Federal Reserve System, as soon as sufficient money is deposited it is re-submitted a third time. Then, the full amount of the check, plus allowable fees allowed by state law, are transferred from their account. Once the funds are settled you receive 100 percent face value plus, and depending on your state, a percentage of the processing fees. This is paid weekly based on collected and released funds.
Your patients also benefit because bouncing a check is an embarrassing thing that no one likes to face. You don't have to call your patients, they don't have to bring in a money order or cashier's check, and no threatening collection letters are sent. Check Collect goes directly into their account electronically and gets the money that is rightfully yours. It's all handled behind the scenes, and this helps to preserve the doctor/patient relationship.
Best of all, this service is free! There are no sign-up fees, no statement fees, no limit on the number of checks processed, no minimum dollar amounts, no cost for special equipment, and no long-term contracts. In addition, collected and released funds are paid weekly, and collections are processed on any bank in the U.S. Federal Reserve system including those out of state. All this means your clinic now has more time to manage the business instead of collecting NSF checks.
So what's the catch? There are three. First you have to complete the enrollment forms. Next you have to notify your bank in person that you want to work with Check Collect. Finally you have to notify your patients you are using the new system. Normally this is simply adding a statement to your patient forms or invoices, and posting a point of sale sticker. That's all there is to it!
As you can see, there is a better way of handling checks!
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