Suppose I want to give someone a loan of $10,000, to be returned in a year. Naturally I would ask him to give me a single postponed cheque of $10,000 for a year. But I thought of a second option: ask for 10 posponed cheques of $1,000 each, all for the same date. The reasons are:
- Maybe in a year his account contains less than $10,000 but more than $1,000. If I deposit a single large cheque, the cheque bounces and I get nothing (unless I go to collection, which I would rather avoid). But if I deposit several small cheques, there is a higher chance that at least some of them are respected and I get some money back.
- A single bounced cheque makes a single bad mark on the debtor's credit report, while 10 cheques make 10 bad marks. Assuming the debtor cares about his credit score, this may give him more incentive to pay in time. I am not sure about it, since I do not know how credit scores work.
Does this make any sense?