Don't Be a Know-it-All
Updated: Nov 3, 2019
I was thinking about the early make-it or break-it days of my company. I was thinking back to when we only accepted echeck as a form of payment from our customers. Being processors of electronic checks, you think we would have known it all. In the beginning, we did not. It is natural at that early stage of business. We just knew how to process faster than anyone else. Lessons we would learn over the next decade would change many things in our business model and even shape how we conduct business today.
What I am going to share with you should not just be studied. It should be memorized and used in your day-to-day business. If you are serious about lasting a long time, do not only read my words. Live by them and put them into practice. The life of your business may depend on it.
Before I get too deep, keep in mind that I have seen tens of thousands of businesses. I have seen the good, the bad, and the ugly. I have witnessed know-it-alls go bankrupt. I have seen those you never expect to make it, flourish and turn into multi-millionaires. I have seen every type of business you could ever imagine. Did you know there is a need for fake feces for movies? That is an actual business.
One of the biggest mistakes business owners make is thinking they know everything about checks and check acceptance. They believe it is easy. They are completely wrong. First off, you do not just accept a check from anyone. You need to know your customer. Taking checks blindly without a plan is a bad idea which will lead to bad things happening. Your bank account/s will get shut down. You will lose money. You may even lose your business.
Never do anything in business blindly. Make a plan that makes sense. Think about it as a learning experience. Let's say you start an online store. You sign up for a merchant account and get approved. That’s it right? You're good to go. Wrong! Now that you’re approved, can you rely on the information you receive from your customers and trust the checks will clear? No. You cannot. Ask yourself, would you let a stranger into your house and trust them with your things? Then don’t trust just anyone with writing a check.
First, collect as much data about your customer as possible. Get their Name, Address, Phone Number, and even a COLOR COPY of their ID whenever possible.
Second, use a verification service and NEVER OVERRIDE a warning that states the check or address may be bad. Keep in mind that no matter how excellent the verification service is, there will always be bad checks. There will always be those that slip through. No matter what you believe or what you hear, it is going to happen.
Third, build a list of trusted customers. If a customer’s check is returned unpaid for any reason, place them on a list and do not allow them to pay you by check again. If you can’t accept credit card, they can wire transfer or send the money to you by ACH or cryptocurrency like Bitcoin. If they pay you for the returned item and you feel like giving them a second chance, make sure you have a set of rules in place you NEVER BREAK. One example would be, two returned checks from any customer in any 24 months, and that customer is placed on a list never to accept a check again. On top of that, block the entire household (address) from using a check for payment. Why be so harsh? Well, it’s business. Scammers use many methods to steal. You need to feed your family and any employees you may be paying. You want to lessen the chance of it ever happening or happening again. It doesn’t matter what excuse the customer gives.
Fourth, if you are shipping a product, remember that a return can happen several days after you took payment. Banks do not process checks on Saturdays, Sundays, or federal holidays. I would wait at least 3-5 banking days before I shipped anything of value.
Fifth, make sure your bank has a sound return reporting system online. You want to be able to see the item or the item’s information online and not have to wait 7-10 days to receive a copy in your mailbox.
Last, check your account/s daily to make sure you stay on top of your game. Upon writing this, we are almost in the year 2020. You can get near-instant information from quite a few banks. If your bank cannot report the return and all of the relevant information online, ditch them for one that can.
If you listen to me on the above and be strict, you will build a trusted list of those that will pay you without fault. You will receive very little, or no returns, and your business will thrive. If you ignore my advice, remember I told you so!
Thanks for reading. If you like this or any of my other articles, please make sure and share them on social media.
Founder and President
Green Payment Processing
About the Author:
Lonnie Passoff started the first-ever internet-only electronic check processing firm in 2008. It has grown to be the largest e-check processor on the planet. A veteran of the United States Army, he has become a multi-millionaire through honest, smart business practices. He frequently speaks at business conventions and is a paid advisor to multiple corporations. He also holds a seat on the board of breast cancer non-profit, as well as a clean ocean initiative in the Caribbean.