Jason I don't think you have been burned yet or enough times yet to be as cynical as us old timers
Like I said before. We are usually dealing with large sums of money not $30 or $40 dollars here, there, or yonder. We are talking at least a few hundred dollars or much more. I know that I don't have alot of "float" money. If someone writes a last minute hot check to the tune of $500 and it takes usually 30 days or more to recoup that and the small fee you can charge to offset the returned check fee, what generally happens is a business person, especially custom cakers like Kitagirl who do this from their homes, they don't do volume enough to have money sitting in their accounts to accommodate a $500 bounced check. Then items they have drawn off the $500 (and it could be quite a few) come through and BAM snowballing of NSF fees and overdraft fees that can easily run into the hundreds. Where are you going to get that back from? You just lost the amount of the price of the cake (cost + your profit) and possibly then some. so what if you do recoup the $500+ from the person...they caused major financial havoc for you and you have no recourse to recoup the additional NSF fees that happened as a direct result of their carelessness or maliciousness. All it takes is ONE time to really do some major damage to your business and your family's wellbeing.
Oh and in my cake business I have never had a returned check back when I was still accepting them. My major burn happened from years of experience in the dance world and dealing with dedicated funds accounts for my dance team. Had a mom accidentally write me a check off a closed account. The funds had already been appropriated. What comes in goes out, no profit on dedicated funds...I was left with a bevey of NSF charges to the tune of over $1800! on a $650 check (granted $650 was part of the $1800) but I had to let that account go because it was a dedicated funds, absolutely NO cushion. I had to pay the items that had returned with something so I had to keep the cash and run it through my operating account to pay the companies I owed money to. Majority of the checks had gone through twice but because it took me nearly 4 weeks to get the funds from this person, who just happened to be a very wealthy person (go figure) I was in a world of financial dismay and embarrassed that my checks to vendors who had known me forever had been returned NSF due to uncollected funds. After that fiasco, I stopped writing checks myself except for my rent payments, everything else I paid with cash or my debit card. And I adopted the NO CHECKS policy for all my businesses!