Check It Out!

July 1, 1996
The three letters (NSF) can hurt, especially when they mean "insufficient funds" on a patient`s check that the bank has returned. How can we decide which checks might be good or which might have odds of never yielding a dime?

Duane A. Schmidt, DDS

The three letters (NSF) can hurt, especially when they mean "insufficient funds" on a patient`s check that the bank has returned. How can we decide which checks might be good or which might have odds of never yielding a dime?

There is no sure way. However, bad-check losses may be cut by as much as 50 percent, according to industry sources. The method makes use of a device known as a VeriFone (about the size of a transistor radio) which you may have seen used when you bought groceries by check.

The VeriFone, which connects to a telephone line, much like a modem hooks up two distant computers, dials into a data bank of negative financial history. This information has been carefully collected from area financial transactions, from closed accounts, past bad checks, stolen check numbers, check scams and frauds, bankruptcies and other law enforcement and public documents.

There are many companies that offer this service, but in choosing which one is right for you, listen to the advice of James Benjamin, CEO of Des Moines-based Vali-Chek of Iowa and allied with Vali-Chek of Minnesota, in Minneapolis. He advises, "Choose a local company that has the largest data base of information in your area. This gives the best chance for ferreting out checks with a high probability for failure."

Benjamin points out that, while his company`s data base contains hundreds of thousands of negative financial items in our market, for example, it would contain little data for people in, say, Miami.

Upon receiving a check for payment of services, our receptionist keys four entries into the VeriFone: our calling code, account number, the ABA (American Bank Association) number and the amount of the check. Immediately, a verification response appears on a tiny l.e.d. (light-emitting diode). The entire transaction takes maybe 15 seconds.

If a verifying number appears, no adverse financial data is on file for this account. On the other hand, the response may report that: a. the check has been lost or stolen; b. an unpaid NSF check is outstanding, against this account; c. there is an unpaid service charge on this account; d. the check may represent a closed account; e. the check has been disputed; f. there have been at least three check inquiries within the past 24 hours, or four within the last 48 hours, or g. a police alert is current for this check writer.

When a verification number appears, it is written on the face of the check and the receptionist prints a receipt from our computer system. If an adverse report is received, she calls the bank for confirmation of sufficient funds to cover the check. An unacceptable check is returned to the patient, along with a card from the verification service. The patient is advised to call the service for an explanation. This process mimics the business tactic of checking a credit card.

A refurbished VeriFone may be purchased for from $100 to $250 for a new one. The more expensive grocer scanners are not needed by a dental office; key-pad input is sufficient. The initial cost is mitigated by its use in another key financial transaction, our topic for next month.

Is this device right for your practice? Detect one bad check before it is accepted and you may well have saved the cost of a year`s use. An analysis of our office use last month shows that one check was presented on a closed account ($41), nine checks were presented on accounts on which NSF checks are currently outstanding ($563) and 664 checks cleared. We count $604 lost dollars as saved.

Our cost? During this time period, our base fee was $18 (which included a WATS line) and roughly 8 cents a check for verification. (This fee varies according to the number of verified checks.) The phone line does not need to be dedicated, since transaction time is brief. Many offices connect to a dedicated fax/modem line.

Verification services often collect bad checks with no additional charge. The user must display a statement that a $20 fee is charged for bad checks, which fee then is collected and kept by the verifier. This aspect of the service, alone, is worthwhile. The intelligent use of technology to make dentistry more fun remains the name of the game.

For further information, or for a reference for your market, call James Benjamin at 800-234-0202.

The author practices dentistry in Cedar Rapids, IA, in an electronic dental office. He has written three best-selling, practice-building books. He also lectures frequently on profit-building with dental computers. Address E-mail commentary to [email protected].