The check is a financial document that is used as a means of payment by which a person, called the “drawer”, orders a bank, the “drawee” to pay a certain amount of money to another person or company, the “beneficiary or fork.”
There are different types of check:
To the bearer: every single who use to present the check can cash it.
Nominative: only the person or company that appears on the check can cash it. These types of checks can in turn be divided into checks made to order (it can be cashed by a third party thanks to the endorsement) or cheap checks onlinenot made to order (only the payee who seems to be able to cash it).
Cross check: to collect it in a certain bank entity and that it collect it in the drawee entity.
Check to pay into account: money collected will be deposited in an account and will not be charged in cash.
Why use a check as a payment method
Let’s now see the advantages of using this payment method:
You can charge wherever you want
Except with crossed checks, a person who receives a check can cash it at any bank. This is a great time saver.
It can be issued whenever you want
This increases the security of not carrying money with you all the time. This makes it possible to streamline business operations. Do not forget that if you write a check you must have money in the account so that the beneficiary can withdraw it.
Has legal coverage
If a check is not paid, there are laws that provide legal coverage and legal action can be taken to claim payment of the check.
Can be post-dated
A post- dated check is one that has been delivered on one date but with a later date. This mechanism allows you to make financed purchases. In addition, it helps to control and manage expenses well.
Can be endorsed
An endorsed check is one that the beneficiary signs on the back and gives it to another person so they can cash it. Thus, time can be saved when collecting it in the event that the holder cannot go to the bank or is traveling. But if you want much more security, the check can also be “non-negotiable.” A non-negotiable check” is one that can only be cashed by the beneficiary, so cashing the check by a third party is impossible.
It is used in large companies
If you are self-employed or a small company, the use of checks can allow you to work with large companies, since they use this payment system to save costs and time.
Can be processed electronically
The check can be processed electronically. Now many checks can be converted into what is called an electronic funds transfer. The information on the check is used to create an electronic transfer from the drawer’s account to the holder’s account.
It is a safe method
The check must necessarily bear the signature of the drawer. In addition, except for bearer checks that are hardly used, checks can only be cashed by the person named therein, or, where appropriate, by a third party if it is an endorsement. In addition, large sums of money can be moved quickly and without any danger of loss of cash.
