RECOVER THE
CHECK, KEEP THE CUSTOMER
CATHERINES OPTS FOR KINDER, GENTLER APPROACH
The objective of any check recovery effort ought to be twofold: To collect the funds, and to avoid alienating the customer.
After all, the majority of returned checks are written as a result of an inadvertent error by otherwise good customers. Any misstep in the collection effort may result in hard feelings. And it’s a fact of life that when you anger a customer, they will tell 20 friends of their negative experience.
That, at least, is how Marie Burris, national credit manager, Catherines Stores, Memphis, Tenn., sees it. But Burris was never able to find a third party service that shared her sense of needing to balance the ambition to recover the check with the desire to keep the customer.
Until last year.
That was when Burris signed on with a start-up company called Revenue Assurance Professionals, Memphis, and the Pro-Check system it had developed.
ProCheck, says Burris, operates under the assumption that if customers are treated with respect and dignity, they not only redeem their returned check and pay an appropriate returned cheek fee, they will also continue to shop with the merchant.
According to Burris, the ProCheck system sends a series of letters requesting restitution of the principal amount, plus a returned check fee ($20 is the allowable maximum in most states.) The tone and form of the initial letter is conversational, with subsequent letters becoming more stern and official.
The envelopes, she says, don't look like legal notices or computer print-outs. They are designed to have a high probability of being opened.
Part of the reason ProCheck works is because it’s swift, she says, The system writes and sends the first letter as soon as the bank returns the check.
Burris notes the recovery possibility is increased when customers are notified swiftly, because they may have written more than one bad check. The company first to notify is usually first to be paid off.
When payments are received, they are processed and credited right away to avoid the chance of a customer getting another letter demanding payment when they have already paid. " There’s nothing people find more annoying than that," Burris says. The customer is then sent a "thank you" letter designed to reinforce the client/customer relationship.
Catherines, a chain of 367 large-size women's specialty apparel stores, doesn't seek to recover all its checks through ProCheck. Checks that meet certain criteria are cover under a traditional check guarantee program.
Before signing with ProCheck, Catherines, which does about 30% of its business in checks, dealt with non-guaranteed checks internally. That usually meant the retailer tried a letter and a phone call before handing the returned check over to a collection agency, Burris says.
Since collection agencies earn a percentage of the value of each returned check, they tend to use hardball tactics which can alienate customers she says. ProCheck, however, charges a flat rate for each returned check pursued, whether it's recovered or not. So the company has no incentive to alienate the customer. The bottom line, moreover, is that the success rate of Catherines' collection efforts has improved 25% under the ProCheck system, Burris says.
ProCheck also offers monthly or weekly reporting capabilities, she says, which make it possible to analyze the checks that are returned, and set up new parameters for checks to be guaranteed. "ProCheck is a professional service that meets our specialty image," she says. Other companies do what they do, but I've never seen it done with such quality. ChrisSaenger [the president of Revenue Assurance Professionals] convinced me to test the system, and it wasn't long before we decided to roll it out chainwide."
According to Saenger, about 56 billion checks are processed in the United States annually, representing 57% of all transactions. Roughly 1%, or 560 million checks, are returned. The incidence of returned checks is on the rise, he says, because of two-income families, ATMs and periodic payments automatically deducted from checking accounts.
Fewer than 20% of consumers balance their checkbooks every month, which means they can easily leave insufficient funds available inadvertently, he says.
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