In this situation, the person receiving money with the help of Cheque can get that money transferred to any other account as well. If A/C Payee is not written in between the lines drawn at the corners of the cheque, then this Cheque is called a crossed cheque. The help of Cheque Endorsing can be taken by signing on the reverse of the crossed cheque. But the Cheque cannot be endorsed after writing account payee.

To encash an account payee cheque, you need to visit the bank where the cheque has been issued, and where the account of the issuer is maintained. You will have to provide the cheque, your ID proof and fill the required details in the encashment slip. The bank will then verify your details and after the clearance, the cash will be handed to you. This will transfer the ownership of the cheque to Sarah, and she can deposit it into her bank account.

Learn about the meaning of account payee cheques and how to use them in this article. Your signature should be appended at the right lower corner of the cheque just above the field ‘Authorized Signatory’. Signing on the left corner defaces the cheque because the bank’s numeric identifier is mentioned in the MICR barcode. Or your cheque is liable to bounce when you sign over the MICR code.

Types of Cheque Crossing

  • Businesses and individuals can track the transactions easily.
  • In India, account payee cheques are governed by the Negotiable Instruments Act of 1881.
  • When a cheque is presented for payment, it is the drawee’s responsibility to process it.
  • But clearance time may exceed in few cases.Nowadays we have Cheque Truncation System (CTS), it makes the cheque clearance process digital and faster.

Writing the cheque, indicating the amount, and identifying the recipient are all part of the drawer’s responsibility when issuing the cheque. After submission, the cheque will be processed, which may take a few days to clear. Submit the endorsed cheque along with the completed deposit slip and your identification to the bank teller. Complete a deposit slip with your account number and the amount of the cheque. Sign your name on the back of the cheque to endorse it for deposit into your account. Clearly write the name of the person or organisation receiving the payment, ensuring correct spelling to avoid any issues.

ISO MSME Reimbursement Scheme: Benefits for Your Business

In essence, the legal effect of the crossing is to guide the banker regarding the manner of payment and safeguard the payee’s financial rights. So by mere crossing you are no longer making payment to PAYEE ONLY. Also in case of dishonor of cheque (in the above example), Mr.Rohan can sue Mr.Satish and in return Mr.Satish to me and finally I can sue to the drawer of  cheque. So drawer is giving instruction to drawee to pay an amount mentioned on the checque to the person named or to the bearer of the checque.

Account Payee Cheque: What is it and How to Write and Deposit It?

Have you ever wondered what the term “A/C Payee Only” signifies when you come across it on a cheque? This seemingly small instruction actually carries significant implications for financial security. A not negotiable cheque crossing occurs when the words “Not Negotiable” are written between two parallel lines on a cheque. This indicates that while the cheque can still be transferred, it cannot confer better title or rights to any subsequent holder.

One can mention ” account payee ” between the two lines on the upper left side of the cheque. One can mention “account payee”, and the words one must write on it are Account Payee or A/C payee. It is two parallel lines on the upper-left edge of a basic cheque. After you deposit the cheque, the banker completes the process and delivers the amount to the payee.

  • In most of the cases, you can deposit a payee cheque in any bank branch.
  • If you are not aware of what is a payee cheque, read on to know all its key features and benefits.
  • Try not to leave spaces in the name, amount or figures denoting the amount, as this allows any other person to alter the cheque.

To begin, complete the cheque deposit form with all of your information. Clip that to the cheque and hand it over to the customer service agent or place it inside the cheque deposit box. Within some days, the bank will transfer the money to your account. The payee must write their account number along with their name and phone number on the reverse side of an account payee cheque.

Nevertheless, in this type of cheque, the payee can give the approval or authorisation for the third party, and further, the third person can recommend it to somebody else. You can complete such recommendations by mentioning the endorsee’s name on the cheque and providing your signature on the reverse side of the cheque. The definition of an account payee cheque is discussed above. Below are the definitions for other different kinds of cheques.

Order Cheque

They confirm that the drawer’s account has adequate funds to cover the requested amount and the check’s validity. Upon successful verification, the drawee pays the amount directly to the payee’s account. The account payee cheque secures your transfer as the payment can only be deposited in the payee’s account. But, in certain cases, the banks may have their own limits for certain large transactions. When it is needed If the payee of the check is not in a position to go to the bank, he can authorize any other person to receive the money. This process is called Check Endorsement and this check is called an endorsed cheque.

The account payee cheque is a payment instrument that simplifies financial processes, adding an extra layer of security and accountability. By writing “account payee” or “A/C payee only” on the cheque, the person instructs the bank to transfer funds directly to the specified beneficiary’s bank account. It prevents fraud and unauthorised transactions, promoting electronic money transfers rather than cash deals.

Crossed Check vs Uncrossing a Check

This is also one of the most common errors people make when writing cheques. You must never scribble, cancel a word etc., on the cheque as the bank is at liberty to refuse to accept the cheque. If you make a mistake in the cheque writing format, you can always write out a new cheque. A cheque is a paper method to access your bank account and pay a specific amount to a person, company, or firm. A crossing may also be made where the name of the bank is indicated on the cheque, to restrict the payment.

As you can see, all of these parties must work together to ensure the smooth processing of an account payee cheque. The payee’s bank is the bank where the payee deposits the cheque. Once the cheque deposit is made, the payee bank verifies the deposit slip and the cheque and sends it to the drawee for clearing.

In this article, we will explore this in detail and look into how to make an account payee cheque deposit. The clearance time for an account payee cheque typically ranges from one to three working days. No, you cannot cash a cheque marked “account payee only”, but can only deposit in into the specified payee’s bank account.

The bank won’t accept your cheque if any of the information is written incorrectly. There are different types of cheques issued by the banks and let us today know the difference between A/C payee and cheque endorsement. To fill an account a/c payee payee cheque, first enter all required information on the regular cheque, including the payee’s name, amount (in words and figures), date and your signature. Then, draw two parallel lines diagonally on the upper-left corner and write “Account Payee only” or “A/C Payee”. Account payee cheques impart an extra layer of security for both the drawer (check issuer) and the payee (beneficiary of the cheque). It authorises only one person to withdraw funds and prevents anyone from writing additional details without the drawer’s permission.

Best practices while writing a cheque-

Maintaining a record of every cheque you write can be very helpful in the long run. It is easy to note the cheque number, amount, date and the name of the person you issue the cheque to. You can thus make sure if your cheques clear your account, keep a watch on any fraudulent or suspicious activity related to your cheques and bank account. You can also avoid any confusion in how to write a cheque due to forgetting the cheque details just in case you need to stop the cheque’s payment or issue a duplicate cheque. Ensure you fill the date field with the right date when you do cheque writing. Not entering the date means your cheque can be drawn on any date as per the person holding the cheque wills.