Cheques and paper items are declining steadily, yet they remain one of the most popular payment methods for many businesses in Canada. When writing a cheque, it's important to use dark ink so the information shows up well in images If writing a cheque by hand, we recommend you use a ball-point or roller pen with black or blue ink.
On the computer, use at least a 10 point font and dark ink colours black, blue or dark purple. You should include the amount of the payment in words since it serves as a backup if the amount in figures is unclear. It's acceptable to wrap the amount onto two or more lines. When you're given a cheque, make sure all the necessary fields are complete and that it has a signature on the front. If a cheque is for more than one person or company, it needs to have the other party's signature on the back of the cheque.
Or, if someone is giving you a cheque made out to them, it also needs their signature on the back. For example, if the cheque is for your company and John Smith, you need John Smith's signature on the back to deposit it. Signatures on the back of cheques are called endorsements. If you're unsure whether a cheque is acceptable, check with your financial institution.
Cheques shouldn't be deposited before their due date. Given the large volume of cheques and automated processing, some items may slip through. If the recipient deposits a cheque you wrote early, you should contact your financial institution. Your financial institution can return the cheque, up to and including the day before the due date. Cheques are considered stale-dated after six months, unless it is a certified cheque. A stale-dated cheque means that the item is old, and not necessarily invalid.
Financial institutions may still honour these items, but there is no obligation to do so. Government of Canada cheques, money orders and bank drafts do not 'stale-date'. Cheques issued by provincial governments are treated as regular cheques and may be considered stale after six months.
To learn more about cheques, view Module 03 Cheques of our educational video series — the Payments Canada Learning Exchange. For more details on Payments Canada's official specifications for cheques, please refer to Standard for paper items and to Rule A10 for cheque imaging specifications. Payments Canada rules don't address this. You should ask your financial institution, since it is likely covered in the account agreement you have in place with them.
The signature will need to be positioned so that it doesn't interfere with any other information and have sufficient contrast to ensure a clear cheque image. When you write a cheque you enter the amount of money that you want to send to the person and who is to be paid to, sign and hand it over to the individual you want to make payment to. Your bank then pays the money to that individual payee from your account. It is one of the safest and convenient modes of making payments and is transferred by mere delivery.
One of the benefits of the cheque is that you can transfer a high-value transaction without any hassle which would be very difficult if hard cash was used instead. The issuer of the cheque has an account savings or current with the bank to which it is connected. There are various types of checkbooks that depend on the type of account you have. Download to safeguard your account — Banking awareness book. It is also known as an open cheque or an uncrossed cheque.
This cheque can be transferred by mere delivery and needs no endorsement. The cheque is negotiable from the date of issue up to three months. It turns stale after the completion of three months and needs to be revalidated before presenting to the bank.
However, these types of cheques are very risky and once misplaced can lead to the loss of the amount stated in the cheque. It is a type of crossed or accounts payee cheque but it is post-dated to meet the obligation at a future date.
It is valid from the date of the issue up to three months. You can use such cheques for the withdrawal of money while traveling. It is equal to carrying cash but you can travel safely without carrying a huge amount. These cheques can be encashed abroad where foreign currency is normally acceptable.
When we cross a bearer cheque twice with two parallel lines on the left-hand top corner, it becomes a crossed cheque. Only the name written on it can get the amount transferred to his account.
With the growing popularity of net banking and ATM usage , types of crossed cheques are gradually becoming obsolete. The dishonor of cheques may happen due to multiple reasons. However, the insufficiency of funds in the account of the drawer of the cheque is the key reason if your cheque has been dishonored. It is very important to understand the reasons for the dishonor of cheques because it is considered a criminal offense and is punishable by imprisonment up to two years or with a monetary penalty or with both.
It uses two business days for a cheque to get cleared and it takes no longer than 5 days for cheques to get cleared by the bank. Step 2: Regional collecting center- to collect all cheques from their presenting branch.
Step 3: To collect cheques from RCC and for settlement of cheque Step 4: Again they collect cheques from the clearing house and send them to their drawee bank.
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Tax Saving. Mutual Fund Investments. GST Software. TaxCloud Direct Tax Software. Need Help? About us. Download link sent. Category Personal Finance. Cheque Reviewed by Vishnava Updated on Nov 11, Meaning of cheque A cheque is a bill of exchange in which one party orders the bank to transfer the money to the bank account of another party.
What are the Main Features of a Cheque? Types of Cheques There are two main types of cheque — Bearer Cheque — is a type of cheque in which the bearer can encash the sum on presentation of the cheque before the authorized bank.
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