CrossCheck Blog

Check Processing & Payments Information

Bad Checks Can Burn a Hole in Your Profits

Posted by Kris Coughtry | Thu, May 24, 2012 @ 09:30 AM

Not sure if you need a check guarantee service? Consider this... a $1,000 bad check can mean you'll need an additional $10,000 in sales to make up the impact to your net profit if you operate at a 10% margin. Maybe you have a 8% profit margin and have a check loss of $10,000 - that means you'll need a whopping $125,000 in sales to make up the lost amount!

This chart demonstrates how a bad check loss can potentially affect your business. Check services can help prevent these losses, which can mean a big difference to your bottom line. Take a look at the chart and see how bad check losses might impact your profits:

check payment profit loss

In addition to the financial hit; bad checks can be time-consuming, frustrating and uncomfortable for a business to collect on their own. Check guarantee services reimburse a business for the check, providing the warranty guidelines are followed. The check guarantee payment providers then put their expertise to work on collections, saving your staff the time and hassle of contacting customers and requesting payment. Additional services such as Stop Payment or COD premiums offer even more protection. Having a check guarantee service in place lets your business do what you do best - serve your customers.

Even one or two bad checks per month can impact your cash flow and test your patience.  Not accepting checks means turning away customers and possibly damaging customer relationships. Check guarantee services help reduce bad checks at the start and provide reimbursement when they do happen. Add a line of defense with a check guarantee service and concentrate on sales, rather than collections.

check guarantee

Written by Kris Coughtry