Cheques can get dishonoured for financial as well as non-financial reasons. The financial reason is insufficient funds in your bank account, but non-financial reasons could be a silly mistake you made while writing a cheque, like forgetting to write the date or a spelling mistake. Here are things you should keep in mind when issuing a cheque. Writing cheques correctly would also minimize the risk of fraud, apart from saving the penalty fee for you.
Begin with the date
Write the current date, if you want the recipient to have the money right away. For a post-dated cheque, write a future date. A mistake here may result into extra debit from your account.
Leave no space
You need to mention the name of the payee or the person to whom you present the cheque next to the printed word “pay” or “payable to” on the cheque. Ensure that you do not leave any space after the printed word while writing the name of the payee.
If you leave ample space, you may be inviting a fraudster to tamper with the cheque. Also, leave no extra space while filling in the amount in words or figures. This, too, will help escape the risk of fraud.
Heed other details
When to write account payee: Draw two parallel lines on the left top corner of the cheque leaf if you want the money to reach a payee account. Ideally, you should also write “account payee” or “A/C payee” between the two parallel lines. If you want the bearer or payee to encash the cheque over the counter in any branch of your bank, do not draw the lines or write the words “account payee” or “A/C payee” on the cheque.
When to cancel bearer: If you are addressing the cheque to a specific person, say Ashwin Kumar, and not to any person who bears the cheque, cancel the word bearer. The word bearer is on the right side of the cheque, under the date. This will also minimize the risk of fraud in case the cheque gets lost.
Affix your signature last
Never sign the cheque before you fill in four vital details—the date, the payee’s name, the amount in figures as well as words. Signing the cheque should be the last step. Ensure you affix your signature above your printed name and not below it.
What if you need to cancel the cheque?
In that case, ensure that you maim the MICR code and write the word “CANCEL” in capital letters across the face of the cheque. This will ensure that the cheque is not misused.