Bad Check responsibility

[dodgeboy]

Wondering how other dealers are handling bad or bounced checks from customes. Who's reponsibilty is it to track down the customer. Also, how does your dealership handle the write-off on bad debt? If my service dept. performs the work, but the office accepts a bad check, my dept is no more to blame than they are, but the check is charged to my policy. My dept. doesn't control the money transactions, the office does. Should bad dept be expensed to the department or to the bad Debt account in the dealer fixed expense? Any ideas or suggestions would be appreciated.

[This message has been edited by dodgeboy (edited 05-01-2003).]

[fburrows]

Dodgeboy:

I am used to an environment where department managers are paid on net. I think they should be charged to the individual department that accepted the payment because that department has some degree of control. I realize that you might not have much control over a parts customer giving you a bad check. You have a lot more control over that check than you do if a new car or service customer writes one. As a manager I want as much control over my fate as possible. I would rather handle my problems as opposed to share in everyone elses problems.

I dont know if you can still do this but using a check guarantee service and only running through the unknown customers checks worked well for us. I have never found it cost effective sending all checks through this service which is want the check service wants you to do. If you just pick the newly opened accounts (low check numbers) and unknown customers then you might make out all right at the end.


------------------
Frank Burrows
Automotive Business Solutions LLC
fburrows@absdata.com

[dodgeboy]

FRANK, I UNDERSTAND WHAT YOU ARE SAYING. I AM ALSO PAID ON NET. I AM THE SERVICE/PARTS DIR. SO NO MATTER WHERE THE CHECK BOUNCES, I SEE IT. THE BIGGEST PROBLEM I HAVE IS, I DO NOT CONTROL THE CASHIER OR ANY FUNCTION OF THE OFFICE STAFF. MY PRIMARY RESPONSIBILITY IS TO SELL PARTS, AND TO SERVICE CUSTOMERS VEHICLES. THE OFFICE TAKES THE CHECKS. THIS IS NOT A HUGE PROBLEM HERE, BUT I GUESS IT IRRITATES ME TO THINK THAT THE DEPT RESPONSIBLE FOR COLLECTING THE MONEY IN THE FIRST PLACE SHOULD HAVE A PROCESS IN PLACE TO ELIMINATE THE POSSIBILITY OF BAD CHECKS. WE ARE NOT A SMALL STORE, AND WE SERVICE A FAIRLY LARGE AREA AND CLIENTEL. SUGGESTIONS ABOUT USING A CHECK SERVICE HAVE NEVER GONE VERY FAR. THAT IS WHY IT UPSETS ME. IF I PERSONALLLY TOLD THE CUSTOMER I WOULD ACCEPT HIS CHECK AND THEN CASHED HIM OUT IN THE SERVICE OR PARTS DEPT. THEN I WOULD FEEL RESPONSIBLE. BEING THIS IS NOT THE CASE, I FEEL IT SHOULD BE CONSIDERED BAD DEBT IF THE OFFENDING CUSTOMER DOES NOT MAKE GOOD ON THE CHECK.

[This message has been edited by dodgeboy (edited 05-01-2003).]

[This message has been edited by dodgeboy (edited 05-01-2003).]

[Ronc925]

I agree. There should be a process. However, I think it should start with the service advisors. Asking if payment is is going to be CASH or Credit Card. If check is going to be the answer, then your check process would kick in. It may be your require a need a copy of a blank check so you can verify the account before you start the work--or what ever policy works in your market.

[joe r]

Just a thought.

Most everyone who has a checking account also has a debit card. It almost makes you suspicious of anyone writing a check.

A lot of businesses are no longer accepting checks.

------------------

[fburrows]

joe r

I was thinking the same thing. I have been out of the dealership for 4 years but it would seem to me that the number of checks that are tendered should really be down. It would be interesting to do a survey for a week of the number and amount of personal checks and business checks. Since the check guarantee services charge a percentage (which you have to pay on a credit card anyway) that might not be such a bad deal when you factor in the time and aggravation involved.

[Toyotaguy]

Our dealership is in a "very well to do" neighborhood. Our customers tend to pay by check. After being burned a few times and trying to collect. I have decided to use Telecheck. They guarantee the money. if the check is denied then you have atleast a reason for it. I pay 1% for it. The credit card charges about the same. So it pays in the long run. If set up right. You don't even know if the check bounces. You get paid in TWO days no matter what. Telecheck will collect the money the customer owes them not you.

Before that we used a collection agency. But they pull 1/3 off the top. It added up alot of money so that why I went with the Telecheck. They do personal and business's so its even better for the wholesale department. How many times does a wholesale account bounce a check. Since I started haven't had one problem. Its worth the 1% to know I will get my money.

good luck guys

[warr_wiz]

I guess it would depend on the amount of bad checks you get, but we use a check authorization service. Each check is run through and gets an authorization #. As long as the proper information is on the check, the check authorizing company is then responsible if a check is returned. We had a very major problem with this so we signed up for the service. In our case it was worth it. (We had 1 customer bounce a $14 check!)

[johnt]

I believe that the process should start with the initial point of contact with the customer. We require our Parts Department to photo copy the drivers license and a credit card. Futhermore, the departments should have a team approach in dealing with "bad checks". We utilize telecheck and they haven proven to be helpful. In any event as far as the charge off is concerned you should not post this to policy. You did not invest this money into the customer.Before any write-offs occur discuss this with the Dealer first, then if necessary you can file form 1099C. This form is a cancellation of debt form. The IRS in the past has attempted to audit such transactions. I hope you find this helpful.Goodluck!