Customers Not Paying My Autoshop

The business' Accountant can advise, however this is a business management issue, and not an Engineering one.

• Would one do repeat business with a client that issued a bad check/cheque (rhetorical question - NNTR)?
• What steps are worth taking via the Small Claims Court, that might recover the debts (rhetorical question - NNTR)?

Anybody in business gets hit like that occasionally. If it's a customer you know, call and tell them what happened; most will appreciate the opportunity to correct it. If you get no response then call the bank and see if there's sufficient funds to cover it now, then take it to nearest branch and cash it. If all else fails notify the the three major credit bureaus then take the Small Claims Court route; you'll need a Work Authorization signed and dated by the customer in order to proceed.

Are they new customers? If so, I'd suggest explaining what you have experienced and request what you consider reasonable upfront payment %. If existing customers, I'd explain the same, and sort some sort of payment schedule. You run the risk of being an 'unauthorized credit lender', but it's better than being ripped off. Depending on law, you may be able to hold a vehicle (as surety) until payment is cleared. Trust is a two-way process.

Learn from your mistakes; stop taking checks. Make a few attempts to collect, then sell the debt to a collection agency.

https://en.wikipedia.org/wiki/Mechanic%27s_lien

14 years, that's dam good. Talk to you attorney on steps to be taken. Considering that the most that can happen is that it goes to court and goes in your favor, that doesn't mean you still get your money. The best that can happen will be to sell your debt to a collector, for pennies on the dollar, and let them take them to court and try to collect.

Where are you located?

What forms of payment do you currently accept?

You have been given good advice about on-selling the debts of these three checks in particular. For the future, doubtless you will harden your view on accepting checks and look to to other payment types:

*1. Cash can be doubtful, with counterfeit bills in circulation. Sources range from North Korea to Peru and you, as an amateur, probably won't detect them. Maybe you can ask the customer to go with you to your bank to deposit the bills, transferring the risk to the experts at the bank.

https://www.washingtonpost.com/news/post-nation/wp/2016/11/22/they-make-fake-money-worth-more-than-cocaine-the-u-s-just-recovered-30-million-of-it/?noredirect=on&utm_term=.8795128bcc4c

*2. Credit cards are tough. Online, all the fraudster needs is the numbers, not even an actual stolen card. No thank you. Face-to-face, if the card is in the auto owner's name, to can get safe-ish payment through your bank's merchant gateway while the owner is present, before you release the vehicle from your mechanic's lien. You will, of course, keep the keys in a mysterious, secure spot while doing this.

*3. Cards in a third party name? No thank you. You will be told, it's my sister-in-law's, it's my partner's, it's a business credit card, it's my son's card ... no thank you. Far more likely the card was found in the Walmart parking lot, or stolen in a burglary.

*4. Bank checks? Possibly not ...
http://www.couriermail.com.au/news/queensland/malcolm-chicken-37-allegeldy-stole-800-bank-cheques-and-bought-forklifts-engines-and-a-bulldozer/news-story/2b26e475b9077c0e44864e0977574d4c

Whatever form of payment you accept, even gold bullion, is a risk. My personal favourite is credit card, in the auto owner's same name, payment approved thru your bank's merchant gateway before the keys are released, in a sum that adds in the merchant commission, if legal in your jurisdiction.
If you hold the vehicle under a valid mechanic's lien and payment is not forthcoming, you can later sell the vehicle to recover your invoice amount subject to your local laws, but the vehicle may be encumbered by prior debt, or in fact may be stolen!

"We Only Accept Payment By Bank Deposit Or Transfer Of Cleared Funds Two Business Days Before Vehicle Collection" could be a useful sign to hang in your reception area. Point to it and read out the words when issuing the quote.

And memorize these two theatrical lines well:
"No sir, it's not a reflection on you, we have trust in all our customers, it's our insurers who refuse to cover cash, card-slips or checks held on the premises".

Where I live a business with the terms mentioned in reply ,

""We Only Accept Payment By Bank Deposit Or Transfer Of Cleared Funds Two Business Days Before Vehicle Collection" could be a useful sign to hang in your reception area. Point to it and read out the words when issuing the quote."

would kill the business. I would not patronize someone accepting cash and holding the car 2 days, or credit card or check for that matter! The shop that does my inspection now has a cash or check only policy, no cc or debit card. Older fellow but tells me cc use costs him money and he knows where his customers live.

Its spelt CHEQUE! FFS

'... Its spelt CHEQUE! FFS...'

.

...but only when and where it is spelt. In less Britishly pretentious placed you will find it properly spelled 'check'.

'Two countries divided by a common language' _{-Sir WLS-C}

3 bad cheques in 14 years. Wow! as opposed to cash? ....and in quick succession? Is it a 'technical' problem due to the mechanical/electrical processing equipment?

Or are these cheques sent by snail-mail and bounced back by the bank days later - and for what reason ? Dud! no such account, no funds - or even 'stopped' due to faulty goods or service.

In my own small business, that was largely conducted on a face-to-face personal basis - with 'industrial' based customers traceable to fixed physical addresses, we took them on credit of a small amount that we could 'write off' if things went bad (both customer and money) - and it sometimes happened. But this technique was far cheaper and quicker that using credit checking agencies.

It was based on a philosophy of giving people the benefit-of-the-doubt at face-value, and taking them on trust, except to my logic if a person was basically dishonest they would try to 'trick' you - so you give them the earliest opportunity - that they take - (it is in their nature to do so - they can't help it) - fortunately a rare occurrence for us.

You have obviously done something right to survive 14 years.

I think we all know of "caveat emptor" where we did not get the 'goods' we paid for. ...... whereas nowadays of faceless persons, and untraceable with virtual addresses - it is becoming more a case of

........."caveat vendor".

Quite honestly I am getting old and find it hard to get my head round all this modern electronic trading - that is supposed to be solved by using Bitcoins - whatever they are.

(PS: I started this reply hours ago. Apologies if I am repeating anything that has come in since)

When I had the auto shop sometimes I would post the NSF cheque on the wall with the no checks sign. Of course I did the phone call and mailed a notice just in case it was a legitimate oversight. Several times posting the cheque was an embarrassment enough to get it paid. Also in several cases we did get the police involved since a NON SUFFICIENT FUNDS cheque was a violation of the criminal code.

'Non sufficient funds'? - illegal perhaps - but is that an issue the police take seriously - especially for trivial amounts?

Agreed the police claim they are swamped however in one case for a large amount when they (police) called the culprit he told them to F off and ended up in cuffs, Now days I know for sure you will get the ( civil matter) that is reason NO CHEQUES FROM ANY ONE. Of course we now have debit and other forms of payment.

The police does not get involved when it comes to nsf checks.

yes, at this point, it's a civil issue

That was my thinking when I posed my question #15.

But for the OP it might be worth adding - if this is the first instance of chasing money - suing is a costly time consuming process - and even if successful in obtaining a court order - it is but the start of a further time consuming costly process of actually getting your money from a stubborn debtor.

The court order enables authorized bailiffs to use force to gain entry and seize goods (you are not allowed to use force yourself) - bailiffs in turn need police support if there is a risk of physical force being used on a person.

Assuming the debtor has assets - probably none - that's why they used dud cheques in the first place.

Perhaps the OP should instead have asked 'what not to do'

Not entirely true. If the individuals make a practice of knowingly writing checks on an empty account, the situation is called check fraud and can be a criminal charge.

That's right, but at the same time the police will avoid getting involved because clear evidence of fraud is very difficult to obtain - and even harder to prove in court - where being a criminal charge, will have to be proven 'beyond reasonable doubt' - where the police emphasis will be on 'punishment' - and not on getting your money back.

I am not saying this to counter the point you made, which is valid, but more to let the OP know that making a debtor pay up is a time consuming and costly process whatever course of action is taken.

But that is not a reason for doing nothing - but a lot depends on the OP's attitude to the situation, whether it is seeking an economical solution (file it under 'experience' - the cheapest) - or seeking retribution for being cheated.

I hope these comments help.

Most businesses plan on a certain percent writeoff for bad debt. I don't like that approach as it enables the bad guys to keep doing it. I personally do strictly cash and carry until I build a history and immediately cut off anyone who doesn't pay. A fellow whom I respected taught me that a customer who doesn't pay isn't a customer. One tool you can use up front is to call the customer's bank when he presents the check and inquire if the check is covered at the present time. This is like getting approval on a credit card and most banks do it. Then cash the check at the customer's bank immediately. If the bank says the check is not covered, then refuse to accept it. Alternately you can have the customer provide a bank certified check, which you validate by calling the bank to verify it is valid. Finally, you could take the customer to his bank and have him withdraw the cash.

If collection is the goal, you can take the small claims court route and then garnish the bad guys wages, if you can find out where they work or you can sell the bad debt to a collection agency at a hefty discount.

If you want payback, then go the small claims court followed by repossession of repair parts and materials you provided.

I suppose we could go Black Mirror or Orville or #metoo and take the offenders to public social media.

Black Mirror had an episode with artificial AI bees where each day a person who got the most hate tweets would be assassinated by killer bee. Orville had an episode about a planet governed by social media where if a person got 10 million social media downcounts, the person would be "corrected" (meaning lobotomized) And we all know about metoo.

Decide how much you care about it and whether you want to do, "the right thing."

Unfortunately, banks will not verify funds unless you have an account with the bank. For instance, if you receive a check from your client and it's written from a Wells Fargo account, then Wells will not verify funds unless you have a Wells account.

This has been in place for many years (at least 18) and it makes it difficult to know if a check is good.

The law states that it's a crime to knowingly write a check where there are insufficient funds to cover it or to put a stop payment on a check without good reason.

Each state has it's own law, regarding a bad check, so verify the information with your state.

In the US, the rules vary somewhat per state, but in most states, as long as the check is not post dated, is not meant to cover some preexisting debt, is over the minimum dollar requirement ($50 in many states), and has been unresolved for the specified time (often 30 days)after notification has been sent that the check was not honored, ...

...it constitutes a FELONY.

Which means there are grounds to push for action even if that isn't the typical action.

Truth, you are correct. Each state has it's own rules regarding bad checks. Post dated checks are not covered by the bad check law - you should never accept a post dated check!

Here in CA, there is no minimum limit to the amount of the check - the DA will go after those who write even small checks. The kicker is that the DA has the choice to file either misdemeanor or felony charges based on the individual case.

I have had luck getting the DA to go after the people who wrote bad checks. I'd say they had a 60% recovery rate and one time I had a convict paying restitution while he was in jail and after he was released. Though he didn't pay the entire amount back, I was pleased to receive partial funds and I appreciate the DA's office doing their job!

Thanks to you and jpfalt, although there are variations in the detail, the mechanism is there to get paid and to seek redress.

I think most of us agree that it is best to adopt/install procedures to avoid the risk in the first place

Horace, you said it perfectly. Prevent the bad checks by adopting the right policies!

The District Attorney (DA) is tasked with catching people who write bad checks and making them pay their debt.

For the people who continually write bad checks, they're put on chexsystems. Your checking account is closed and banks can't open a checking account if you're on chexsystems.

Your post #27 etc, came in whist replying to #26. Thank you.

I would add that my comments have been based on personal experience before I retired 20 years ago. It looks as though the processes have been tightened up and streamlined since then.

Except that it seems to me that cheques are now 'dead', even credit cards - when everyone wants paying by debit cards at the till or on-line, and now by bank transfer using mobile phones - that leads to these things called 'bitcoins' - whatever they are!......and 'wallets' to keep them secure.

I can't keep up.

And considering that when you write the check now-a-days, its process at the point of sale, and this is getting more and more regular. Which is great.

Sorry. I do not understand what you mean by 'which is great'. Can you explain what is 'great' about it - do you mean bitcoins ?? - I am struggling.

When purchased an item or if you get your car worked on, you pick up the car, and write a check, it is process at the point of sale (POS). your check gets scan by reading the account information and routing number on the check. It will then contact the bank electronically to verify the funds are available. If there are NSF in the account, your check will be rejected and the cashier will ask for another form of payment.

Its becoming more wide spread, but it is happening.

This start back in the early 2001 or 02. I printed my own checks, and I didn't have the correct ink for printing checks, (some type of iron oxide) that the readers can read,... and it'll process the hand written check, very similar to a checking account debit card at the point of sale.

I've since put everything (when accepted) on my credit card now. I rarely use a debit card because of lack of security for compensation due to skimmers at the pumps or other types of theft.

It's magnetic ink that's at the bottom of the check. A magnetic reader reads the ink (routing number and account number).

The magnetic ink isn't as important as it was in the past. That's because you can now take a picture of the check your depositing with your phone.

One big benefit of the POS check system is that the company who processes the check guarantees the check (as long as they accept it in their system). Of course, they charge a fee to run checks thru their system. And on top of the fee, they hold funds for a day or two.

I'm a bit old school and I still write checks, though not at the grocery store - the people who do hold up the lines!

I just looked at my business checkbook; I'm at check no 11601! I think we started at check number 100, many years ago.

A few years ago, we were victims of debit card cloning. The credit union rep told us to only use our PIN and debit card at places we trust. If we're unsure, we should use the Visa/Mastercard charge feature vs debit. No PIN is required.

I'm leery of using Apple pay or the Google version. It just doesn't sound safe to me - again old school thinking.

When I was growing up our coins were called 2 bits - quarter and when we were old enough, we had a wallet to keep our dollar bills in (or if we were lucky, we'd have a fin, sawbuck or a Jackson in there).

Depending on the locality, you take them so small claims court, get a judgment and set the bill collectors on them, find out where they work and garnish their wages or get the local sheriff to seize and padlock their premises for sale at auction. In Oregon, where I reside, you are entitled to treble damages for a bad check. You can report them to the credit services and tank their credit score. You can declare global thermonuclear war on them.

Or, you can let them know their check bounced and give them an opportunity to make it right with you and if they don't, then do the above.

mechanics lean