Writing a cheque involves a few simple steps. Though it is pretty easy and straightforward, there are multiple things you need to factor in while issuing a paper cheque. Let’s take a look at what all things you should be aware of before and after issuing a cheque.
What to Keep In Mind When Writing a Cheque
Make Sure Your Account Has Sufficient Funds
- Your cheque may get rejected when you have inadequate funds in your account.
- You might also incur a penalty as charged by the lender for handling your returned cheque.
- An overdraft interest charge may be applicable in order to cover the bank’s loss in paying the overnight interest.
Ensure to Write the Payee’s Name Legibly
Print or write the person’s (or entity’s) name you intend to pay to clearly. If there is any extra space left on the line after you’ve mentioned the name, ensure to cross out that space using a line. By striking out the unused space you’ll prevent the occurrence of unapproved alterations later. Write your cheque using a dark coloured ink that is permanent (a ball pen may be) and that cannot be erased or washed away.
Cross Your Cheque the Right Way
- A crossed cheque will get cleared via the payee’s bank account. If your cheque is crossed across with two parallel lines (only) on the top section of the left-hand side corner of your cheque (general crossing) and there is no cancelling, your cheque can be used to deposit money in anyone’s bank account.
- Suppose you don’t want anyone to encash your cheque and you want your cheque to be non-transferable, you need to follow the steps given below:
- Cross your cheque by drawing 2 parallel lines at the top section of the cheque towards the left-hand side corner.
- Cancel “bearer” on your cheque and include either “Account Payee Only” or “A/C Payee Only” when you intend to make a payment to a specific payee whose name you’ve mentioned on your cheque.
- In case the holder wants to encash the cheque, keep the following things in mind:
- The crossing of your cheque is not required.
- You need not delete “bearer” on the cheque.
- You need not include words such as “A/C Payee Only” or “Account Payee Only”.
Specify the Amount You Intend to Pay Clearly
- Write the amount payable in words and do not miss on writing “only” post the amount in words. Strike off any unused space with the help of a line so that there are no unapproved alterations later.
- Use the box on the cheque leaf to key in the amount payable in actual figures. Strike out any unused space with a line.
- The amount mentioned in words as well as in numbers needs to be exactly the same. In case, it doesn’t match, there is a possibility that your cheque will be returned and you’ll be liable to pay charges as applicable.
- Make sure the decimal point is written legibly and is clearly visible. Avoid using “/” (backslash symbol) to indicate a decimal point because it can be mistaken for the number “1”. It is recommended to incorporate a comma when you’re writing an amount that has more than 4 digits. For example: Instead of writing S$20000, you should write it as S$20,000.
Avoid Issuing Post-Dated Cheques
A post-dated cheque may not get cleared as soon as your payee receives it. Also, in case your cheque returns, processing charges may be applicable.
- This is an optional step. You can include a note on the line which refers to “For”.
- Including a memo will have nothing to do with how your concerned bank will process your cheque.
- When you include a memo, it helps you to remember the purpose behind you issuing the cheque.
- A memo can also be used to mention some specific information that is required by your payee to process your cheque payment.
Double Check All the Details Mentioned on Your Cheque Before You Sign On It
- Do not pre-sign a cheque.
- Cross verify all the details you’ve written on the cheque before signing it.
- It is recommended to not have simple signatures considering the fact they can be forged easily.
- If you make any changes to your cheque, make sure you put complete signature of yours against the changes made.
- In case you’ve made more than one change, it is advisable to issue another cheque all together to avoid further confusion.
Things to Do While Issuing a Cheque
- Use black or a blue inked pen to issue a cheque. The ink used needs to be permanent and should not be erasable.
- Write the required details on the cheque in block letters (preferably) because it will be legible, clear, and can be easily read.
- In case your cheque payment is meant for an entity (like an XYZ Company), ensure the word “Bearer” is cancelled.
- Mention the payee’s full name as it appears in his or her bank records.
- Make sure to cross your cheque when you don’t want the cheque to be encashed. Also, make it non-transferable by incorporating “Account Payee Only”.
- There are boxes provided on the cheque leaf to write the cheque date. Ensure you write the date within the boxes only.
- Make sure the cheque amount you’ve written in numbers as well as in words is the same. Do not leave any unused space and strike such spaces with a line to ensure there are no unapproved changes in the future.
- Ensure to sign your cheque appropriately as in just above the line as specified on your cheque leaf.
- Your signature on the cheque should match as per your signature that is registered with your savings or current account with the concerned bank.
- If any changes are to be made, cancel the cheque by drawing a horizontal line and make your complete signature on the back side of the cheque.
How to Issue a Cash Cheque
- You’ll need to mention the word “Cash” on the Pay line.
- You should not cross the cheque.
- You should not cross out the “Bearer” word.
After You Write a Cheque
- Make sure your cheque payment is recorded either via a paper register or an electronic register. When you record your payment, you can avoid spending your money twice as in the funds will still appear as unused in your account unless and until your cheque is cashed or deposited (because that takes a while). It is always a best practice to record a payment as soon as you write a cheque.
- Your bank statement will only reflect your cheque number as well as the amount. However, the details of whom it was paid to will not be recorded and that’s exactly why you need to record your payments via your cheque register.
- Important information that can be entered in your cheque register include:
- The date on which you issued the cheque.
- The cheque number.
- The specific details of the transaction like to whom you issued the cheque to.
- The cheque amount.
- With the help of a cheque register, you can check the balance in your account. You can verify each and every transaction on your bank account to ensure you and your concerned bank are on the same lines. In case, transaction details between the two vary and you have more balance in your account versus what is supposed to reflect as per your cheque register, it signifies that someone has not deposited the cheque you issued to them.
Before Writing a Cheque
Think about what other payment options you’ve apart from using a cheque. Other modes of payments you can opt for include:
- See if there is an option to pay your bills online. You can even raise a request with your concerned bank to send across a cheque on a monthly basis and automate the payment process without much of your involvement.
- Opt for a debit card for your daily spends. By doing this, you’ll save on your cheques and you will not have to re-order cheques on a frequent basis. With a debit card payment, your transaction details such as date of payment, payee name, and the amount paid will get recorded electronically.
- Schedule automatic payments for any kind of a recurring bill you need to pay. Regular payments include insurance premiums, utility bills, telephone bills, etc. The only thing you need to ensure is your account has sufficient balance to facilitate a successful automated payment.
- Irrespective of what mode you choose to make your payment, always ensure your account has sufficient funds. This is because, with insufficient funds your payments can bounce which can result in you paying hefty fees along with facing charges for potential legal problems.
Follow a Few Security Tips When You Write a Cheque
- Always use a pen with non-erasable ink when you write a cheque. If the ink is washable or erasable, there are chances of your cheque being altered without your approval. For example: the cheque denomination or the payee’s name could be altered.
- Never sign on a blank cheque. Sign on a cheque only once if you’ve filled in all the required details and cross verified the same. In case you’re not clear on the amount payable or have doubts with the payee’s name, do confirm on the same and then write a cheque rather than blindly signing on a blank cheque.
- When you’re writing the amount payable, do not leave unused spaces after the amount because scammers may use this space to alter the amount altogether. Start writing the amount from the extreme left side of the space given and once you’ve mentioned the amount, strike off the unused space that is present after the last digit.
- Opt for cheque books that come with a carbon copy because it will help you in tracking which all transactions you’ve spent your money on. Also, you can easily keep a track on what exactly you wrote on every cheque you’ve issued.
- Make sure your signatures are consistent on all of the cheques you’ve issued. When there is a mismatch in a signature, it will be easy for you as well your bank to identify any activity of fraudulent nature.
- Do not opt for a cheque payment if there’s another way of making the payment. For recurring expenses or bills, opt for making payments via an online portal. Try to use cash or a debit card for your every day spends. Issue fewer cheques as much as possible.
- Monitor the number of cheques you’ve used with the help of the cheque register that is given along with your cheque book. You can track the entire amount you’ve spent via your cheque payments. You can validate your transactions made via cheque against your bank statement. For any discrepancy you come across, you can intimate the bank authorities immediately.