Decided to phase out cheques

[adaycarelady]

I always wondered what would happen if all my clients decided to pay by cheque one payday. I'd have no income until I knew all the cheques cleared!

[mickyc]

I have only had an issue with cheques with one family. I have no issue with cheques and prefer them actually. My bank doesn't put a hold on any of my cheques unless I deposit it in the bank machine and even then it is only 2 or 3 days. I get cheques from everyone every 2nd Friday morning and my husband runs to the bank by noon and deposits them all. I make all my payments, my mortgage comes out that night as well as our car loan. My bank would call me on Monday or Tuesday if a cheque bounced.

[Busy ECE mommy]

I use cheques and have only had one bounce in 5 years. The client told me it bounced before it even showed on my account, and replaced it with a new one. I worry about the emt just from the standpoint of chasing clients on payday. I get 6 months of cheques in advance and can deposit them at my convenience. My bank(CIBC) doesn't put holds on my cheques.

[Rachael]

I use the Square all the time but not for daycare - I have a photography business too and in the Summer, I take Little League Team images. This is when I use it and it's brilliant. There is however, a transaction charge.

It's 2.75% per swipe. If their card has a faulty strip and you have to manually type in the numbers, then it's more. The Square doesn't take debit cards.

There is also a similar product which RBC recently brought out. The same transaction charge but at the moment, it only works on Apple products. One for Andriod will be coming soon.

For the photography, this makes sense as so many people order packages and then "forget" to e-mail their funds or go to the web site and pay through Paypal. For my day care, I personally wouldn't use this due to the fees. It's one thing for a parent to order a $20 photography package and me to lose just under a couple of bucks, but for me to lose 2.75% of my day care income for fees, that's soon adds up. And yes, you could add that 2.75% to your fees for those paying by credit card but I wonder how many parents would actually want that inflated charge and so, I doubt many would opt to pay that way.

I opted out of cheques about 18 months ago. I have one long term client who still pays by cheque but in the 6+ years they've had children here, I've never had a problem with their payments.

I had a large turnover in the last 12 months with children moving out of Province, starting school, so anyone new coming in pays in cash at drop off time on the first day of the pay period or by e-mail before drop-off on the first day of the pay period. No payment on pay day, no dropping off until fees are settled.

EDIT

When I did take cheques, I would pay them in at the bank machine on Sunday (my pay period starts Monday) as they weren't going anywhere until Monday anyway. That avoided me having to go to the bank after close of business and they were cleared on Monday morning.

I only had one client years back where a cheque bounced but my contracts used to say that if that was the case, the client would have to pay in cash in future, they were liable for the outstanding fees, a late payment fee of $5 a day from when the fees were due to when I got the cash from them, the $40 bank charge plus any other bank charges I incurred due to their missing funds. However, it was over a week before I knew it had bounced so that was a real pain for all concerned.

You can go into the bank and deposit cheques with the teller on Saturday even if they are dated on Monday. What the bank will do is hold that transaction until the date on the cheque.

[Crayola kiddies]

I only take cash or emt

[5 Little Monkeys]

I only take cheque or cash and haven't had any issues. I have a fee for bounced cheques and have only had to charge it twice but in both cases they told me about it before it happened but unfortunately I had already put the cheques in the bank so I was still charged. My fee covers the charge from my bank plus a bit extra for the inconvenience.

5-7 business days seems long to me. Have you spoke to your bank about the wait time for cheques to clear?

[Rachael]

5-7 business days seems long to me. Have you spoke to your bank about the wait time for cheques to clear?

Although some banks will clear a cheque sooner or immediately, that sadly doesn't mean the funds are available in the payer's account.
If the client banks with the same bank the provider does, the time to learn about a NSF cheque is faster. But when the funds are being sent from one bank to another, it takes longer to know for sure.

Although the cheque might be cleared and the funds made available, if later in the process it's learned that the funds weren't in the payer's account, that credit will be reversed.

The cheques go to a central sorting location and then they are scanned and the information sent to the payer's bank for payment. That means it goes centrally somewhere within your banking organization and then the information goes centrally somewhere to the client's banking organization. Depending on what time of the week that deposit was made, it can take between 5-7 days to discover that the payer didn't have sufficient funds to clear the cheque. Once that discovery is made, the credit is reversed, the bounced cheque returned to the banking organization of the provider, who in turn write to their customer and inform them.

Some banks hold funds for the duration of that entire process - usually for new clients or for those who don't deposit cheques often. When a bank customer regularly pays in cheques and has a history of those cheques being good, then the duration the customer is made to wait to access the funds, is shortened. But that's only because the bank is expecting the cheque to be good based on banking history of the person making the deposit. A bad cheque might be reverse credited up to 10 business days after deposit, depending on where the central place for processing is.

This is why scammers get away with fake cheques. The banking organization is usually out of country and so the cheque presented for payment has to be sent out of country for validation of funds being available. I know when my parents send a cheque to the boys for birthday's or Christmas, before I had a history of these cheques being good, they would sometime be placed on hold for up to 6 weeks.

[5 Little Monkeys]

Rachael, that is true. Thinking back, I guess because I had called my bank, the process went quicker because they knew the cheques would bounce.

[Rachael]

Rachael, that is true. Thinking back, I guess because I had called my bank, the process went quicker because they knew the cheques would bounce.

Yep. It's easy to forget that there is a paperwork process behind a cheque and although much of that is automated, there is still some level of the physical cheque being mailed from one financial organisation to the next. Where we live in an age where the internet makes many things instant, we all kind of forget sometimes, that not everything else is. :-)

[mickyc]

I do think that being in a smaller city is benificial as it doesn't take as long to find out if funds are not available. Any cheque that I have that has been put on hold is usually removed after 3 days. The family that did give me 2 NSF cheques was also very quickly that I found out.

My husbands child support cheques which are cashed 2 provinces away clear our account the day after she cashed them.

My bank also doesn't charge me any fee for NSF, only if I was to write one but not if I get one. I still charge my families $30 if they write me one. Luckily it was only the one family.