Accepting Checks Can Cost Money and lead to bad checks

Unfortunately for business owners, approximately 1.1 million checks bounce every day.  They are returned to the merchant marked NSF (non sufficient funds), account closed, stop payment, lost, stolen, forged, etc. That means that approximately 1% to 2% of the checks you accept will bounce.  At best, merchants who attempt to aggressively recover bad checks by themselves rarely achieve a 50% collection rate.  The American Collectors Association, Inc., (traditional collection agencies) reports an average recovery rate of only 22%.

Banks are capitalizing on this growing trend of bad checks by increasing the returned check fees they charge you, the merchant, every time a check bounces. This increases your cost of doing business and reduces your profit. 

A typical medium to large-sized business often hires one-to-two full-time employees just to manage their bad check collections and accounting process. That’s extra overhead for a business to absorb!  If you are a small business owner, you can’t afford to hire collection personnel. In fact, you may think that you can’t afford the extra costs of accepting checks at all…

Why You Need to Accept Checks

National Statistics are proven and documented. If you choose not to accept checks, you eliminate a 20% income stream for your business. *

 In the U.S., 89% of adults have a checking account

• Half of the U.S. shopping public cannot qualify for a credit card
• 23% of households do not use credit or debit cards
• 45% of all credit card holders are within 5% of their credit limit
• People are accustomed to writing checks
• People use the checkbook to budget finances
• People use checks to float money
• 86% of business payments are made by check to establish a paper trail
• 83% of consumer bills are paid by check
• 63% of non-cash payments are paid by check
• Even credit card companies use checks to pay their bills

*Statistics gathered from:
NACHA and the U.S. Federal Reserve
Check data from Depository Financial Institution Check Study, Federal Reserve Bank, 2000.
All other data from Electronic Payment Instrument Study, Federal Reserve Bank, 2000.
 

If you choose NOT to accept checks from your customers, you risk losing MORE money from LOST SALES than you would write off by using CybrCollect™ to recover bounced checks.  With CybrCollect™, your losses are minimized. National statistics prove that CybrCollect’s™ average net-loss ratio is less than 1/4% — that’s less than the cost of processing credit cards.  That makes check acceptance the least expensive form of payment next to cash.

Cheaper Than Credit/Debit Cards, Check Guarantees and Verification Services?

You may think, “I don’t need to accept personal checks because I can accept credit or debit cards and guarantee myself more money”… but you would be incorrect.  Consider the hidden costs of using credit cards, debit cards, check guarantee services, and check verification services.  Add a processing percentage to statement fees, monthly fees, minimum requirement fees, equipment costs, plus transaction swipe charges, and these forms of payment can get quite expensive!  Let’s compare the typical average costs…

Cost Comparison for Credit/Debit Card, Check Verification, and Check Guarantee Services

By listing the average total cost associated with various payment methods, you can see how much profit you actually forfeit when compared to accepting checks with CybrCollect™.

 These costs are based on five transactions at $20.00 each, for a total of $100.

 

5 transactions X $20.00 = $100.00 in sales

 

Credit Cards	Average costs range from $3.50 to $4.50 (retail outlets) Average costs range from $4.50 to $6.25 (MOTO)
Debit Cards	Average costs range from $4.00 to $6.00.
Checks with Guarantee Service	Average costs range from $2.70 to $5.25. Note: Not all checks are truly guaranteed – 6% to 8% are rejected at the point of sale and another 10% are exempted from the guarantee during re-presentment.
Checks with Verification Service	Average costs range from $2.05 to $3.50. Note: Only stops the habitual bad check-writer.
Checks without any Services	Depending upon industry and location, 1% to 2% of checks received will bounce.  Average costs to collect and/or write off range from $4.00 to $6.00+ – depending on labor cost for recovery and bank bounce fee charges.
Checks with CybrCollect™	Average costs range from $0.20 to $0.24 Depending upon industry and location, 1% to 2% of checks received will bounce. With CybrCollect™, your net-loss ratio is reduced to less than 1/4% (national average).  Express Returns™ eliminates returned check fees charged by your bank.

 

Accept Checks with CybrCollect™
                    and Keep More of Your Money

 

With CybrCollect™, accepting checks produces your highest profit margin next to cash.  Failure to accept checks means lost sales, and lost profits.

Let the Experts Do It…

Let CybrCollect™ absorb the time and expense of collecting those irritating bad checks for you.  Let the experts help you, so you can get back to servicing your customers and increasing your profits!

Fewer Customer Hassles!

There’s one more unique benefit to using CybrCollect™. You don’t have to be the one calling the check writer to demand your money!  No more embarrassing confrontations with your customers. That doesn’t mean you forfeit control of situations where special customers have simply made a mistake… with CybrCollect™, you maintain complete control of your checks.  If you want to handle the check yourself, make one toll-free call, and CybrCollect™ will return the check right back to you.

For more information just give me a call or send me an email.

I try to keep all my existing and prospective clients informed of banking industry changes, trends and factual data. This information is intended to hopefully be useful in helping you be informed and help you better manage your business.

Jerry Jones

National Account Manager

  D. (512) 282-3919

  C. (512) 563-5321

  F. (512) 282-8300
CheckCollection@yahoo.com