With the many electronic payment methods available today, small-business owners see fewer and fewer checks presented for payment. Online banking apps make it convenient to accept paper checks and deposit them using the app. In some cases, before you deliver goods, you'll want to verify that a paper check you're given will be covered by the issuing bank. You can do this using several methods.
Why Verify a Check?
When you present a check to your bank, and it doesn't clear, not only do you not receive the funds you're owed, but you might be charged a fee for the declined check. In most cases, if the check writer made a simple mistake, they will pay this fee. You can redeposit the check when the person tells you they now have sufficient funds in the account.
Another reason to verify a check is fraud. With so many methods for paying electronically, you might wonder why someone is using a paper check, especially if they tell you they won't make an electronic payment. To avoid looking accusatory, you might set a policy that your business verifies all paper checks before releasing your product.
If you've had a check for more than a few weeks, you might want to make sure it's still good. The person who wrote it might have forgotten about it (especially after a month) and not maintained adequate funds in the account.
Verify by Phone
Many banks will verify a check by phone. In some cases, you can use an automated payment system. Follow the prompts, which require you to provide information such as the routing and account numbers, check number and amount.
If you talk to a live agent when you call, they will not tell you anything about the person who wrote the check or their account (such as how much money the person has in the account), but if you tell them you have a check for $X, they might tell you "Yes" or "No" regarding the check clearing.
You need to tell the bank who you are, that you would like to verify the check, provide the routing and account numbers at the bottom of the check, the date of the check and the amount. If the bank does not verify by phone, ask the customer service rep how you can verify the check.
Don't rely on a phone number printed on a check. It could be part of a scam. Look up the bank's phone number online, recommends the Federal Deposit Insurance Corporation (FDIC).
Visit the Bank
The most reliable way to verify a check is to visit the bank on which the check was written. Banks that accept third-party checks (which might include your own) can call another bank, but they won't have the real-time access to the check writer's account information that the issuing bank does.
If you can show the bank the check and prove that you are the party to whom the check was written, the bank will likely verify it for you. You need to provide identification that shows you work for the business if the check was made out to a company.
The bank can tell you whether the check is legitimate (it might be a fraudulent check) and if the account has enough money to cover the check. If so, you can endorse the check and cash it while you are sure the check won't bounce.
A check you verify one day won't necessarily be good the next day (or even later that same day), points out Consumerism Commentary. If you take the check back to your home or business and attempt to deposit the check into your account, by the time that check is presented, the person who wrote the check might have written other checks or taken enough money out of the account that the check you have no longer clears.
Use a Check Verification Service
If your business regularly accepts checks, you can sign up for a check verification service. These services can't offer the same level of verification as the original bank that issued a check, but they can tell you the name of the bank based on the routing number and other information. They can also tell you if the person's or business's name is on a bad-check registry.
Some of these services claim to be able to tell you who owns the account and if the person has enough funds to cover the check that day. Make sure you know exactly what service one of these services is offering before you pay for it and rely on it to guarantee a check.
