1. Do not record it as received until it clears
The first mistake happens before the bounce. A cheque handed over is not money received, and treating it as a settled payment means your books show a balance that does not exist. Record the cheque when it is received and mark it cleared only when it actually clears. Then a dishonour is a status change rather than a correction, and your outstanding figure was never wrong.
2. The timelines matter
Dishonour of a cheque attracts specific legal consequences, and the process has strict time limits — for issuing a demand notice after receiving the return memo, for the drawer to pay, and for filing a complaint if they do not. Those periods are short and they are not extendable through inattention. If the amount matters to you, speak to a lawyer as soon as the return memo arrives rather than after trying informal recovery for a month.
3. Talk first, in most cases
Legally available is not the same as commercially wise. Most bounced cheques in trade are a timing problem rather than a refusal, and a phone call the same day resolves them. The relationship is usually worth more than the speed of recovery. Keep the notice route available by watching the dates, but use it when the informal route has actually failed rather than as an opening move.
4. The records you will need
If it does go further, what supports you is the underlying transaction: the invoice, the delivery record with the vehicle and receiver, the ledger showing what was outstanding, and the cheque details with the return memo. A ledger generated from real documents produces all of that on demand. One reconstructed from a register months later is exactly where these matters weaken.
5. Reducing the risk beforehand
Three habits reduce bounced cheques more than anything you can do afterwards. Credit limits so exposure to any one party stays inside what you can carry. Statements monthly, so a party is never surprised by an amount. And a preference for UPI or bank transfer over cheques for regular customers, which removes the instrument entirely. A QR on your invoice quietly moves a lot of payment away from cheques.
6. A note on advice
The law here is specific and the consequences of getting the process wrong are real. This is a description of the shape of it, not legal advice. For any cheque where the amount matters, take the return memo to a lawyer promptly — the cost of that conversation is small against the options you lose by waiting.