CONTROLLING CASH OUT
YOUR CHEQUE HAS BOUNCED!
Robert Inkaka Kanyamanza
Maximizing cash flow works both ways. Just as you want to get paid as quickly as possible and turn cheques and other promises to pay into cash as the earliest opportunity, you generally don’t want to pay a day sooner that you have to, unless it will cost you money or you will get a discount to do so.
Cheques: In much of Africa, you cannot count on much “float” time for cheques that are in the mail. The recipient will most likely get your cheque in a week or two and in most cases, receive credit from the bank on the day it’s deposited. Make sure there is money in the bank to cover every cheque you write. You will not only avoid NSF (Non Sufficient Funds) charges but also the embarrassment and sloppy business image of having a supplier call you with the bad news that your cheque has bounced.
Two things will surely happen if you issue a cheque and it bounces. You will have to pay a penalty. The bank where the cheque was deposited will most likely also penalize the cheque beneficiary. And, if your cheque was issued towards repayment of a loan, if it bounces, then, in addition to the penalty for the bounced cheque, (charged by both banks), you will also pay late payment charges.
Also remember, in most African countries, issuing an NSF cheque is a punishable by the law. If a cheque bounces due to insufficient funds, it is a criminal offence. The business or the person in whose favour the cheque was issued can file a complaint or a case. And for sure multiple bounced cheques under your name or your business’s name affect your credit worthiness.
So, technically speaking, the solution is simple: Don’t let your cheque bounce!
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Your Cheque Has Bounced!