Collections

Handling Full Payment Checks

Sometimes a customer pays an account with a check for less than the amount due on the account and writes “Payment in full” on the back of the check. Your company’s credit and collection policies should instruct employees to contact your lawyer before depositing such “payment in full” checks. In some cases, your legal rights can be preserved by endorsing the check with the words “without prejudice”. In other situations, your right to pursue the unpaid balance of a customer’s debt will be lost if you deposit the check, regardless of how you endorse it. Your lawyer can analyze the facts, advise whether you should return the check or cash it, and recommend steps to collect the unpaid balance.