Here's How You Can Protect Your Business

7 Things Contractors Can Do When a Client Bounces a Check Part 2

There is nothing more embarrassing than bouncing a check. It feels a little shameful. It appears that the store or vendor is going to judge you. You may judge yourself. Why don’t I have the money? Am I being irresponsible? The one thing worse than bouncing a check? Receiving a bounced check.

Contractors have historically had issues getting paid. That’s why lien laws exist and companies seek the help of Birmingham contractor attorneys. However, a bounced check can be particularly challenging because, if you are submitting it electronically, you may not realize that it’s been bounced initially. You may be budgeting the money from the check. You will also be charged for each bounced check. Too many bounced checks can greatly damage your bottom line.

In the first part of our series on dealing with bounced checks, we provided a few actions that can be taken to prevent or deal with them. We will continue the conversation with a few more suggestions in this article.

Go to Your Client’s Bank

One option for getting money from a bounced check is to go to straight to your client’s bank. You can ask them if there are funds available for a particular check. If there are, you can go to that bank to cash the check.

Taking Legal Action

If you reach out to your client after they’ve bounced a check and they’ve been unresponsive, it may be time to contact a Birmingham contractor attorney. Initially, you will want to send out a certified letter stating your attempt to collect on the check payment. It should contain all the pertinent information about your client, the check, and where to remit payment. It should also establish a deadline for paying off the debt. An attorney can help you with this letter. If the letter doesn’t generate a response, you can sue your client in small claims court for the debt, plus the effort it took to recoup the debt.

Use a Conditional Lien Waiver

This tip applies to all payments, not just checks. If you sign a lien waiver, be sure that it’s a conditional one with the condition being that you waive lien rights upon payment. Otherwise, if you sign an unconditional lien waiver and a check bounces, you may be signing away your right to receive payment thereafter.

If you would like to speak with one of our Birmingham contractor attorneys, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.