Freelance writers, web designers, editors and other professionals have a serious disadvantage when it comes to unscrupulous clients. Since freelancers often work as a “one-man-show”, they don’t have the resources to hire attorneys and collection agencies for bad checks and delinquent payments. But what are you supposed to do when you receive a bad check?
Even if you are on top of your financials every minute of every day, you might not discover that a client as written you a bad check until several weeks after the fact. Most banks will send you a letter letting you know the check number that came back with non-sufficient funds, and your bank will probably charge you a fee (anywhere from $6.00 to $30.00).
Not only can this ruin your day, but it can also present certain financial problems, as well. First, many banks will allow you to spend the money for a certain check before letting you know that there were insufficient funds to cover the amount. That money will be debited from your checking account, which could leave you in the red. Not only do you lack the money from the check, but a bad check can put you in the hole.
The first thing you should do when you receive a notice of a bad check is to call the person who wrote the check in the first place. Don’t bother with letters or e-mails – you need answers now!
When you get your client on the phone, explain that his or her check came back with insufficient funds. Explain your policy on bad checks and request that he or she remit payment to cover the balance immediately, including any fees you were charged by your bank. Be polite on the phone, but don’t back down if your client attempts to “explain away” the problem.
The next thing you should do after you receive a bad check is to pull all of the information you have on that client, including the service agreement or contract he or she signed before you performed whatever job they requested. Make sure that your contract has a clause related to bad checks; if it doesn’t, you’ll certainly know to include one next time.
Unfortunately, there isn’t anything you can do to force your client to pay up after you receive a bad check. You can go through the normal collection channels that are available when a client doesn’t pay at all and you can always take your claim to civil court. Be aware, however, that it is much easier to attempt to collect a debt out of court than to jump right down to the courthouse.
The next thing you need to do after you receive a bad check is to call your bank. Find out what the bad check has done to your balance and whether or not there’s anything you need to do. If the bad check has put your account in the red, you’ll be better off explaining the situation and asking your bank about your options.
Receiving a bad check is a nightmare for any freelancer, but remember that you do have options. If all other attempts to collect the debt don’t prevail, you might be better off retaining the counsel of an experienced attorney. That way, all of your bases are covered and you’ll know you’re doing everything in your power to collect the debt.