So a customer is standing at your sales counter handing the clerk a regular old fashioned check to pay for a $1000 purchase from your store. What happens next can be critical to your mental health and the bottom line of your business. Hopefully, you have a check policy that has been carefully crafted, well communicated to your sales staff, and is stringently enforced. If not, good luck.
The first step in formulating a check cashing policy is a phone call to your local Police Department. Every law enforcement agency I have ever dealt with has been extremely cooperative and helpful in assisting citizens with information on local laws and recommended small business practices. In fact, getting the knowledge out to the public can actually make their jobs easier.
Let’s examine a few aspects of a sound check policy. First, understand it isn’t mandatory that you even accept checks. Some fast food establishments utilize this strategy. This may be effective if your typical transaction is under $10, but it may be a turnoff for the customer when larger dollar amounts are involved. Please consider what your competitors are doing before cutting out checks altogether.
If you are willing to accept checks, other aspects come into play. What will be your acceptable trade area? Will you allow out of area or out of state checks? Try cashing an Idaho check next time you are at Disneyland and see how that works. A fifty mile radius is often a sound consideration.
Next, be sure the check is personalized with the person’s name, physical address, and current phone number. Look to see if it is drawn on a local bank. It is rare, but occasionally someone with a local address has a bank outside of Idaho. We don’t recommend taking any generic counter checks or two party checks unless you know and trust the customer. Also pay special attention to checks where the check number is in the low one hundreds. This indicates a new account.
What else should you look at? Many stores place limit restrictions on their employees so checks in large amounts must be approved by management.