You want to believe the guy, but can you really? After all, he's done this to you before. You've called about late payment, only to have him tell you "It's in the mail!" A couple of days later, when you still haven't received the check, you call again, and hear:

• "It must have got lost in the mail!" (When the check arrives the next day, you check the postmark, and find he didn't even mail it until the day after you called.)

  Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter, which Credit Today purchased in 2006.

• "I thought it went in the mail, but I guess the mailroom screwed up."

Actually, you can now solve virtually all "The check is in the mail" tactics for under $200. The program is called CHAX--a faxed check program through which you can receive valid checks from customers within seconds.

Here's how it works.

1. Customer fax signed and dated checks to you, keeping the original checks for their files and for later reconciliation (see #3 below). In theory, the customer could call you with the information on the check (bank number, check number, date, amount, etc.). But there are several potential problems with called-in checks.

   "If there were ever a question about the validity of the check authorization later, you have no documentation with a phone call, but you do with a faxed check," notes Jerry Simonoff, president of Micro Business Software (Plainview, New York), creators of the CHAX program. "Also either you or the customer could transpose numbers or make other critical numerical errors during the conversation, leading to deposit and/or reconciliation problems later."

2. You enter all of the information from the faxed check into an IBM-PC using the CHAX software. (It is available in both DOS and Windows format.) This information includes the company name and address, check number, bank number, account number, amount, and the name of the person signing the check.

   Once all the information has been entered into the computer, you hit "Print," and your printer produces three copies of the check:

   • A valid bank check that you can deposit to your account.
   • A duplicate copy that you can keep for your records.
   • A second duplicate copy that you can send to the customer for verification and additional reconciliation.

   If a customer informs you that he plans to pay you this way every month, you can enter permanent check information (customer name and address, account number, bank number, etc.) into your software, eliminating the need to key in everything each time. All you would need to key in each time would be the date, check number, and amount.

   The bank draft that your printer prints out is prepared using a magnetic toner cartridge on a laser printer, which allows the check to go through the banking system as a regular check and be read magnetically. "The checks meet all ABA standards," emphasizes Simonoff.

   What about the signature? The printer prints the customer company's name with an additional statement: "This payment has been authorized by your depositor." The printed signature is accepted under Uniform Commercial Code law. (See Sidebar for UCC authorization.)

   "CHAX checks are honored by banks across the U.S.," reports Simonoff. "To our knowledge, none of our customers has ever had a problem depositing one of these checks into their accounts." In fact, the CHAX system offers a bit more security than even a regular check.

   "A printed signature is accepted by your bank, because you are a known depositor and are depositing the check into your account," explains Simonoff. "However, if someone else tries to actually cash the check, the printed signature, being somewhat out of the ordinary, would flag the cashier to investigate further."

   Each CHAX check contains the customer's telephone number and your telephone number, so a bank can call you or your customer to verify a check's authenticity.

3. Each month, your customer receives his CHAX checks along with his regular checks and statement from his bank for reconciliation. He can reconcile each CHAX check with his original check that he faxed you, as well as with the confirmation copy you sent him.

Applications
Companies now using CHAX are accepting checks from customers as small as $5 and as large as $100,000. Some of the most common applications:

• Customers who wish to make sure they receive their cash discounts often like to fax checks to their suppliers so they do not have to worry about possible post office delays.

• A customer whose order is being held because of late payment (or other problem) can offer to overnight you a check, but he still cannot get his order until you receive his check the next day. With CHAX, he can fax you a check and you can authorize shipment in a matter of moments.

• If a customer is faced with a C.O.D. shipment from you, he must cut a check, take it to his receiving dock, and make sure an authorized employee is available to hand the check to the driver upon arrival of the shipment. Of course, such an arrangement is fraught with "what ifs" for the customer and for you. With CHAX, the customer can fax you a check immediately and be cleared for shipment within minutes.

The cost? CHAX software is $169, and checks range from $45 to $__ per thousand.

Here's the Uniform Commercial Code (Applicable Sections).

Title 1 Section 1-201 (39) Signed includes any symbol executed or adopted by a party with present intention to authenticate a writing....

Title 3 - Commercial Paper

Section 3-401 (1) Any writing to be a negotiable instrument within this title must (a) be signed by the maker or drawer;....

Section 3-401 (2) A signature is made by the use of any name, including any trade or assumed name, upon an instrument, or by word or mark used in lieu of a written signature.

Section 3-403 (1) A signature may be made by an authorized agent or other representative.... No particular form or appointment is necessary to establish such authority....

Editor's Note: The above article originally appeared in the Credit & Collection Manager's Letter, a newsletter purchased by Credit Today in 2006. This article originally appeared prior to 2000.

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