Best Practices for Accepting Customer Checks

Accepting checks is most likely a common part of your dealership’s daily operation. Accepting checks comes with risks, particularly when sales entail large amounts of money. There are steps that you can take to mitigate the risks associated with accepting customer checks. These steps include the implementation of an overall business policy as well as training on best practices for employees. Following these simple steps can help avoid frequent issues.

Accepting checks is most likely a common part of your dealership’s daily operation.  Accepting checks comes with risks, particularly when sales entail large amounts of money. There are steps that you can take to mitigate the risks associated with accepting customer checks. These steps include the implementation of an overall business policy as well as training on best practices for employees. Following these simple steps can help avoid frequent issues.

First, ensure that your dealership’s check policy prohibits the acceptance of temporary checks or checks with low numbers. Opening new accounts with little funds is common among people committing fraud and low numbered checks can be a giveaway. In developing your policy, you may consider allowing exceptions to the general ban for long term customers with ongoing relationships who may have simply changed banks or the like. A second element of your dealership’s policy should be the prohibition of accepting checks in excess of the purchase. This tactic is also used to commit fraud and there is little upside to accepting a check over the purchase price. Dealerships may also consider prohibiting personal checks altogether in favor of requiring a cashier’s check. If not for all purchases, your policy may require a cashier’s check on purchases over a certain dollar amount to mitigate risks. In drafting your policy, you should make clear that third-party checks, where a customer has a check made out to them that they are attempting to sign over, are prohibited and will not be accepted. Checks should only be accepted directly from the customer. Your dealership’s policy should also include a zero-tolerance policy, meaning that checks will not be accepted from customers whose checks have bounced previously. In order to enforce such a policy, your dealership must develop a system of monitoring the status of checks accepted by the business on at least a weekly basis.

In addition to developing a thorough policy which establishes the risks your dealership finds to be acceptable, there are some employee practices that will also help prevent some common issues. Employees should watch the customer sign their name on the check and then confirm the identification of the person with an ID. Witnessing the signature and crosschecking identification are easy preventative measures to ensure the person whose name is on the check and the person signing it are actually the same. The employee should also check to make sure the check is dated as of the date of purchase and that the payee (your dealership) is the intended person or entity.  Also, a quick verification that the written-out amount matches the numerical amount of the purchase price. Lastly, a general overview of the check to make sure it seems legitimate, has nothing crossed out or altered, and hasn’t already been endorsed should be done prior to acceptance. These policies and practices are easy ways to manage and mitigate your dealership’s risks in accepting checks.  This Flyer briefly summarizes these points and can be displayed near your registers as a reminder to staff.