Sept. 9, 2004
Check-recovery services are nothing new, but some operators say that only recently have they become more of a blessing than a burden.
Just a few years ago, check recovery services' payment recovery rates were low, and their methods kept the operator out of the recovery loop. Operators had no real idea what amount of their funds were being recovered and returned to them. Those services also cost operators one-third to one-fourth of the face value of each check.
The check recovery industry earned most of its bad reputation, said Richard McShirley, director of business development at JU$TCHEX in Oxnard, Calif.
Jennifer McDaid, office coordinator for Howard Pizza Inc., a Greensboro, N.C., Domino's Pizza franchisee, said bad check recovery companies have made many operators skeptical about their services. She said her boss had to work to convince her to speak with John Wood, president of Check Plus. When McDaid learned several other Domino's franchisees liked his services, she agreed to talk to him, though she still put him on the hot seat.
"I basically asked him, 'How do I know you're not just taking these checks, collecting on them and not giving us the money?'" McDaid said. "But now I'm finally confident he's not doing that."
Getting cash back
According to Wood, Check Plus's free service works like this: If a check bounces at the bank, it's sent to Check Plus, where it's re-presented electronically through the national check clearing house. Information about the bad check writer is then posted to a Web site that allows operators to see which customers are stiffing them. Operators also get faxed updates of all information.
To cover costs, Wood's company gets 70 percent of the bad-check fee, while the remainder — plus the full face value of the check — goes back to the operator.
According to McShirley, JU$TCHEX's recovery system (its service also is free) is more operator-centered. Bad checks are returned from the bank to the operator, who goes to JU$TCHEX's Web site and re-presents the check for recovery. When the funds are recovered, the operator gets the full face value of the check, plus the state fee, minus JU$TCHEX's $8 charge.
David Parker, a one-store Hungry Howie's franchisee in Ventura, Calif., said he's really pleased with the control he has with the JU$TCHEX system. He knows who the bad check writer is, and he can move to recover his funds at his own pace.
"It used to take maybe three weeks after the check had been returned that I knew who the customer was. And in that time, they could have written me three more bad checks," Parker said. Knowing who the perpetrator is, he added, helps him decide how to recover his funds. "You can decide whether to put it in (the POS system) that they're a cash-only customer from now on. Or if it's a good customer, you can give them a call personally and work it out."