Cheques are pretty useful when it comes to ordering a payment of money from a particular bank account. The paper-based payment instrument is usually addressed to a banker and is signed by the person who has funds deposited with the bank. It instructs the bank to pay a certain amount of money on demand to the person who bears the cheque.
The process of depositing a cheque is usually easy and straightforward. Various banks around Singapore provide the facility of depositing cheques. In this article, we will discuss the intricate aspects related to depositing a cheque.
How Do You Deposit a Cheque?
You can deposit a cheque with any bank in one of the following ways:
Deposit Cheque at a Bank Branch
You can visit the nearest branch of your bank to deposit a cheque in person. This is generally considered more efficient as your cheques get cleared faster. You have to simply endorse the cheque you want to deposit. You have to fill out a deposit slip in this case and hand your cheque to a teller at the bank. You could also verify your new account balance if your cheque has already been cleared.
Deposit Cheque Through ATM
Banks also allow you to deposit cheques through an ATM. You have to swipe or insert your ATM card and enter the PIN. You must carefully read the onscreen instructions and select the option of depositing funds. Next, you have to insert your cheque and it will be processed automatically. You can verify your account once the cheque amount is credited.
How Do Cheque Deposits Work?
Cheque deposits are pretty straightforward. You have to deposit the cheque into your bank account. Once the bank receives it, the cheque image will be sent to the payer’s bank, following which the funds will be credited to the payee’s bank account. It usually takes some amount of time for the banks to clear cheques.
Cheques are usually cleared in Singapore on weekdays. Cheques can’t be debited from or credited to customer accounts on weekends and public holidays. Also, for weekdays, there is a cut-off time for cheque deposits in case of most banks. This cut-off time is 3:30 p.m. for most banks in Singapore. There are certain banks that allow you to deposit cheques on weekends. However, these cheques are usually cleared only on the following Mondays. The validity of cheques usually extends to six months from the date mentioned on the cheque.
The following table illustrates how much time it generally takes for your account to be credited/debited.
|Day of cheque deposit||Date for availability of funds|
|Cheque deposited on Monday to Thursday before time of cut-off||Next day after 2:00 p.m.|
|Cheque deposited on Monday to Thursday after time of cut-off||Next to next working day after 2:00 p.m.|
|Cheque deposited on Friday before time of cut-off||Monday of the following week after 2:00 p.m.|
|Cheque deposited on Friday after time of cut-off||Tuesday of the following week after 2:00 p.m.|
How Do You Track Transactions Made Through Cheques?
You can use cheque register to keep a track of the transactions made through cheques. You can use it to keep track of the aggregate sum you have paid through cheques. You can also verify these transactions in reference to your bank statements. This will also help you take note of any inconsistency.
What Should You Keep in Mind While You Write a Cheque?
You must be careful about the following things while writing a cheque:
Availability of Enough Funds in the Account
Crossing of Cheques
You must ensure that you have funds enough in the bank account. In case you don’t have sufficient funds, your cheque will bounce back and that could hurt your reputation. Also, you may have to pay charges to the bank for every bounced cheque.
You have to cross your cheques wherever appropriate if you want the it to be non-transferrable or you want to avoid encashing of your cheques. The clearing of crossed cheques takes place through the bank account of the payee.
You can cross it by striking two parallel lines on the top left portion of the cheque. Alternately, you can add “Account Payee Only” while striking off “bearer” on the cheque. This is useful if payment is to be received only by the person indicated in the cheque. In case you cross your cheque using the first approach of drawing two parallel lines on the top left portion, but you don’t strike off “or bearer”, the cheque can be deposited into other party’s bank account.
However, you can’t cross your cheque if it is to be encashed by the person holding the cheque. Similarly, you can’t strike off “or bearer” on your cheque, if it is to be encashed by the holder. Additionally, a holder can only encash the cheque, if “Account Payee Only” hasn’t been added to the cheque.
It’s important to ensure that the payee’s name is written correctly on the cheque. This helps establish the legitimacy of the cheque. You must also draw a line to cross out extra space, if any, in the line that follows the name. This helps avoid any case of unauthorised alterations which might arise at a later time. You must ideally use a dark and permanent ink to write the name.
The following steps will guide you to write the payable sum carefully and clearly:
- You must always remember to write the payable sum in words. The amount should be followed by the word “only”. You must not forget to cross out extra space, if any, to deal away with unauthorised changes. You can do so by striking a line on the extra space.
- The sum payable must be written in digits within the box on the cheque. Again, remember to cross out extra space, if any, by drawing a line.
- Ensure that the sum in words and the one in digits match. If they are not the same, the cheque will be rejected, and you might have to incur unnecessary charges.
- Besides, be careful while writing any decimal point. It must be properly visible.
Verification of Details
Ideally, you mustn’t sign cheques beforehand without matching and validating every detail. You must avoid using a signature that appears simple as there is a risk of it being easily forged. In case you have made changes to the cheque, you must put your complete signature against the changes. It is always ideal to get a cheque newly issued if there are several changes.
What Can You Do in Case of Returned Unpaid Cheques?
The following steps will guide you in terms of the course of action in case your cheque was returned unpaid:
In Case You Are the Payee
- An image return document (IRD) will be sent to you in place of the original cheque if the cheque you deposited into account was returned unpaid. The IRD replaces the physical cheque so that it could be presented again to be cleared.
- Bottom part in the IRD indicates the reason for cheque being rejected and if it can be presented again to be cleared.
- If the IRD can be presented to the bank again to be cleared, you have to remove the IRD attached to the Return Cheque Advice. Besides, you have to deposit it in the particular bank you deposited your cheque earlier. You can also deposit it at the bank’s Quick Cheque Deposit box.
- However, you can sent the IRD back to the payer and request for a newly issued cheque in case you’re not allowed to present the IRD again to the bank for clearing.
In Case You Are the Payer
- When your cheque is presented for payment, it might not be accepted if there weren’t enough funds in your account. Additionally, you will be charged with an administrative fee against the returned cheque and overdraft interest fees to help cover bank’s loss in case of overnight interest.
- The payee’s bank receives the proceeds from the cheque from payer’s bank when the cheque is sent for clearing. In this situation, the amount would be deducted the same day from the payer’s account.
- In case of insufficient funds in payer’s account, the entry will be reversed by the bank on the following business day. An overnight overdraft interest fee will be levied from the payer’s account on the balance that has been overdrawn.
How to Stop Payment on a Cheque
You might need to stop payment on a particular cheque due to some reason. For instance, in case of a theft, you might want to stop payment on the entire cheque. You can do so by immediately notifying your bank. Besides, you have the option of cancelling payment on a cheque that has been already issued if it has not yet been cleared or encashed. In this case, the bank might charge you with an administrative fee.
Q. Do all Singapore banks use Cheque Truncation System?
A. Yes, all banks issuing Singapore dollar cheques and local US dollar cheques use the Cheque Truncation System. It was implemented with the aim to provide an online cheque clearing system based on imaging.
Q. What should I do in case I receive a cheque that was not compliant with the Cheque Truncation System?
A. You can ask for a new cheque from the drawer. This cheque must be compliant with the Cheque Truncation System.
Q. Can I make changes to a cheque under the Cheque Truncation System?
A. Yes, you can make alterations to a cheque under the Cheque Truncation System. However, you have to endorse the changes using your full signature.
Q. Will the bank charge me for issuing the image return document?
A. You will have to pay the returned cheque charges in this case. There are no extra charges for issuing of image return documents. However, if you want the original cheque returned, you will have to pay a retrieval fee of S$50.
Q. What are the security features of an image return document?
A. The image return documents are serialised and printed on CTS watermark paper. Additionally, the participating banks control them quite strictly.
Q. Will I be allowed to present a torn image return document?
A. No, you will not be allowed to present a torn image return document. You will have to place a request with the drawer for a new image return document.
Q. What should I do if the image return document I could present is lost or misplaced?
A. The image return document is provided in place of the cheque that was dishonoured. In this case, you must ask the drawer for a new cheque, besides requesting the drawer to put a stop payment instruction on the image return document that has been lost.
Q. Can I use an image return document again if it has been already presented but it was returned?
A. No, you can’t use an image return document if it has already been presented and returned. A new image return document has to be generated in this case.