In the commercial world there are several types of payment through which a certain amount of money can be charged. This is the case of checks , which can be issued and signed by a person or by a company so that the amount of money that has been previously consigned is paid.
A check is a security which consists of an order to be able to issue a certain payment in a bank after the document has been issued by a company or person. It is a way by which money can be exchanged into cash or deposited into a bank account.
- Check types
- What is a check for?
- Expedition requirements
- Who is the beneficiary
- How to charge
- Importance of the check
Among the main characteristics of checks are the following:
- They can be drawn at the banking institution in which the drawer has sufficient funds.
- In a security by means of which the person who has the bank account in their possession is known as the drawer .
- The person who receives the money is called the beneficiary .
- Banks fulfill a drawee function when it comes to check cashing.
- The check forms can be issued only by banks.
- They are always payable on demand .
- In the event of losses, an order may be issued not to pay the check.
- Checks can be returned when there are not enough financial funds , when they turn out to be insufficient , when they have been partially paid , when the account has been canceled or when the account balances are garnished .
There are several types of checks, these are the following:
- Bearer check : this type of check has the bearer indication written on it and can only be paid to the person who presents it at the bank.
- Nominative : they are the checks that are destined to a certain person and that also may or may not have the clause that says ” to order “. They can be paid to individuals or legal entities and it is also transferable by endorsement .
- Nominative not to order : in this case, the recipient is a specific person and has the clause that says “ not to order ”. In this type of check you must find the name of the natural or legal person who will have the right to receive the money.
- Specials : in these there is a subdivision and in it we can find the following types of checks:
- Cross check : in this type the drawer must place two diagonal and parallel lines in the front part of the document. There may be general and special cross checks.
- For payment on account : it has printed the legend that says “for payment on account” or “to consign on account”.
- Certificate or conformed : it is the one in which the drawee bank guarantees the signature and the presence of funds for the payment of the document.
- Blank check : when issued, they remain incomplete.
- Circulars : they are a type of check to order which are issued by banks, branches or agencies.
- Management : they are issued by the bank.
- For travelers : they are issued by the drawee and are payable at foreign branches.
What is a check for?
The check is a type of document used by the owner of a certain bank account to authorize or enable another person to receive an amount of money . It is a form of payment without the need to be able to transport the cash, giving the beneficiary greater freedom to choose the place and time to change and cash the money.
The main components that must be present in a check for it to be valid are the following:
- The name of the person who will pay the check, in other words, the name of the chosen bank or lender.
- Place where the check will be paid .
- The date the document is issued.
- A space that must be blank and that must also bear the symbol of the currency depending on the country.
- The indication that says “ pay to ” or “ pay to the order of ”, where the name of the beneficiary of the check should be placed.
- The phrase ” the sum of ” which functions as a type of unconditional order for the payment of a specified amount of money.
- The signature of the person issuing the document, which must be handwritten. In some places and banks, the signature can also be printed or stamped.
- If the issuer of the check is a company that is already legally constituted , then the signature of the check must also have the respective stamps and duly registered in the bank.
The formal requirements that every check must have in order to be issued are the following:
- Denomination of the check.
- The amount of money that must be paid established in the currency of the country where the document is issued. This must also be written in letters and numbers.
- The name of the person obligated to pay, which is usually a bank.
- The place where the check will be payable .
- The date and place where the document is issued .
- The signature of the person issuing the check.
Who is the beneficiary
The beneficiary of the check is the person who has the document in their possession and who is responsible for receiving the payment that has been drawn. The beneficiary is also known by the name of ” payee ” or ” holder ” of the check.
How to charge
The idea of cashing a check is converting the document into cash . Checks can be cashed at the windows of the banking entities , they can also be deposited in the same place and directly in the savings bank accounts as long as the previously signed document is presented along with the identification document of the person who collects. the money.
In the case of special checks or crossed, they should be paid in the form directly to customers and the checks are delivered and that have the phrase “to establish account” may only be effective through bank deposits .
Checks must be presented within the following dates to prevent the document from expiring:
- In a maximum of fifteen days from when the document is issued, when they are payable in the same place where they have been issued.
- In a maximum of one month , when they are payable in the same country where they were issued, but in a different area.
- Within a period of three months , when the checks are issued in Latin America and will be exchanged in a different country but belonging to the same region.
- A period of four months when the checks are issued in Latin American countries but will be paid in countries that are not within the same zone.
Among the main advantages of using checks are the following:
- When used correctly, they turn out to be very safe and agile .
- It has a data book in which you can verify the operations carried out.
- The entrepreneur has the ability to choose the bank in which he wants the check to be deposited.
- When checks go unpaid due to insufficient funds, there are several laws that can protect the person collecting the money.
- They can be issued at any time.
Among its main disadvantages we can find the following aspects:
- There is a risk that the document will be lost and, depending on the type of check, this can represent a danger as it could be exchanged by anyone.
- To make cash money, the person shall attend an entity bank .
- The checkbooks must be requested at the bank and must also wait some time for the entity to deliver.
- If the account from which the money is to be taken has insufficient funds, the check cannot be cashed .
Importance of the check
The check is a document that makes business relations between the parties faster and easier, as well as generating a certain degree of security and greater trust . They are documents that can be collected in different banking institutions or that can be perfectly deposited in savings accounts. Although today electronic banking has stripped the check of its place, it continues to be important due to its quality as a security .