Are Check Guarantee Services Worth the Money?

Signing with a check guarantee service is like buying bad check insurance. In determining whether to go with one, business owners should weigh their bad check risk against the costs associated with

the service. While the additional costs might not be justified for some businesses, those especially vulnerable to bad check writers — such as businesses that could lose a day's profits on one bad check — might want to seriously investigate such a service.

There are a lot of check guarantee companies out there with slightly different services and prices. The company will pay you, up to a contractually agreed amount, for every bad check you receive, and the company then attempts to collect the check itself.

The fees that check guarantee companies charge for this service vary widely and are driven by factors such as the business' location and the particular industry. For example, a car dealer accepting checks for large amounts or an electronic goods retailer — both of which are at statistically higher risk of receiving bad checks — might pay more than a grocer for the same guarantee service.