Are Check Verification or Check Guarantee Services Beneficial to Your Practice?

The following article was published in the Atlanta Hospital News in February, 2009. By Jeffry M. Finkel This month’s article focuses on “Check Verification” and “Check Guarantee” – two services that can help practices safely accept patient checks (i.e., avoid problems with “bad” checks) and improve the efficiency of depositing these payments into your checking account. While some practices do not receive enough “bad” checks to warrant paying just for “bad check” protection, they may find beneficial an option that electronically transfers payment from the patient’s checking account to the practice’s checking account. This benefit eliminates the need to drive to the bank to deposit checks. These services may be used for checks presented in person, mailed, or deposited in drop boxes (lock boxes). Many companies provide Check Verification and Guarantee services. While features, fees, and procedures vary among these companies, the following general information should help familiarize you with the services. This article will: Provide a basic introduction to these services Help you decide if these services are appropriate for your practice Suggest ways to select a provider Provide tips on controlling check acceptance costs Check Verification Check Verification is a process that screens checks and check writers against a database of "bad check writers". When a patient presents a check for payment, the staff scans the check using a check reader or combination check reader/credit card terminal. The check reader links to the service provider’s database via a phone line or the internet. The transaction is approved if the patient is not listed in the “bad check writer” database. While approval does not guarantee that the check will not “bounce”, the likelihood of this happening is greatly reduced. Verification transactions usually cost around $0.15 - $0.35/per item. The vendor may charge an enrollment/application fee as well as a fee for programming the check reader. You will pay a statement fee and incur a monthly minimum fee. Check Guarantee Check Guarantee is a service in which the service provider guarantees that the practice will receive payment on any “bad checks”. The practice pays two fees – a transaction fee and a percentage of the payment – typically about the same percentage you pay merchant processors for credit card payments. Vendors may charge an enrollment/application fee as well as a fee to program the check reader/terminal. You pay a statement fee and incur a monthly minimum fee. With Check Guarantee, the service provider checks the information about the check writer against its database. If the provider considers the check safe to accept, it provides approval – which means you are guaranteed payment for the check even if it turns out to be “bad”. The service provider will require you to obtain information such as the patient’s driver's license number and phone number. Typically, Check Guarantee includes depositing the payment into the practice’s checking account (referred to as “Electronic Check Acceptance”) – usually within two days. Some providers also offer “ECA” with Check Verification services. Key Potential Benefits Accept checks with minimal risk Improve cash flow Reduce the risk of lost, stolen, or damaged patient checks Reduce trips to the bank with ECA Eliminate bounced check fees with ECA Achieve “peace of mind” especially with first-time check writers, with checks drawn on out-of town banks, and with low-number checks Key Buying Tips for Check Verification and Check Guarantee Select a service provider with as large a database of “bad check writers” as possible. Ensure that the database includes many merchants in your geographic area. Select a service provider who uses multiple variables to screen out “bad check” writers. Seek a service provider whose check reader automates the verification process as much as possible. Consider a service provider who provides free scanning equipment. Select a service provider who offers low per-check percentage fees, and low transaction, monthly minimum and statement fees. Determine if the service provider can cancel the program or increase fees if the number of “bad checks” exceeds a set number. Determine if the service provider does not cover certain kinds of checks (e.g., temporary checks). Seek a service provider who will waive enrollment/activation fees. Take action now to determine if Check Verification or Check Guarantee services can benefit your practice. Jeffry Finkel is the President and owner of Overhead Reduction Services. Jeffry may be reached at (404) 995-9112 or Jeff@OverheadReductionServices.com.