Four Important Steps In Filling A Check

2019/05/26

A check is generally issued to make payments to a vendor, to transfer money from one account to another and to deposit and withdraw money from a bank account.

A check has various components that are required to be filled before a transaction can take place.  It is important to understand the components of a check in order to fill it correctly.

Let us discuss Important Steps Involved in Filling a Check.

a)    Fill Pay to the Order of:

This space should be filled with the name of the Payee to whom the payment is to be released. Payment can be issued to an individual as well as in favor of a company. For Instance, a check can be issued to John Slater or to ABC LLC. In case payee name is not known, Cash can be mentioned in this space. However, filling Cash in this space is generally not advisable as it can be used by anybody. Depending on the requirements, an individual may cross the check as “Account Payee” which means that amount will get deposited in payee’s account only.

b)    Enter Date:

It is important to mention the date on which the check is issued. Generally a check has a validity period within which it will be honored by the bank. This validity period is calculated from the date entered on the check. Format for this date may vary from country to country, that is, in some countries dd/mm/yyyy may be acceptable while in other countries mm/dd/yyyy may be acceptable. It is advisable to fill this date correctly as post dated (any future date) checks are generally rejected by banks. For Instance, an individual may issue a check in favor of a vendor with a future date. This vendor will not be able to claim the payment till the date mentioned on the check.

c)    Enter the Amount:

Amount has to be entered both in figures and in words. A box is available on every check. In this box, amount is to be entered in figures. Amount in words is to be entered on the line just below the payee. It is important to note that both these amounts should match otherwise the bank will not accept/honor the check. In case of any fractions/cents, amount in words can include figures. For Instance, a check for an amount of $ 200.30 will be written as Two Hundred Dollars and 30/100.

d)    Signature: 

A check without signature has no validity even if rest of the information is correct. It is important to remember that a check should be signed only by the account holder whose signatures are in the records of the bank, that is, who is authorized to conduct transactions for a particular account. This is particularly true in case of a joint account, where authority to issue checks has been made available to the primary holder only. For Instance, an individual has a savings bank account. This individual is the primary holder while he has made his mother a secondary holder in the account without any rights to sign/issue the checks. Hence, in this case only the individual will be able to sign/issue the checks.

featured personal-finance

MORE ABOUT Four Important Steps In Filling A Check

Historia amp