Cheques!! Yes, there are still several businesses (not all of them small) that make payment by cheque, the reasons for this are abundantly clear, the main one being that from issue to clearing its often an average of ten days.
Of course, the best way to avoid fraudulent cheques is to try and encourage your customers to pay by bank transfer thus avoiding them all together, yet you cannot refuse valid methods of payment.
- The Post-Dated Cheque:
Whilst years ago a bank cashier would go through every cheque to ensure they were all dated within the last six months and not forward dated, that is now seldom the case. With overnight deposit boxes and bulk deposit there is little checking, it is only when the cheque comes to being presented that it will be returned. Implement a simple date check before banking to avoid this and a diary system to pull forward for banking on the post-dated date.
- PCBOD – Payment Countermanded by Order of The Drawer
The debtor instructs their bank that the cheque is not to be paid. This may be down to lack of funds to clear it on presentation or a dispute presenting itself at the last minute. Avoid disputes by delivering on time and ensuring workmanship and quality checks are carried out to satisfaction.
- Cheque Returned, not in accordance with Mandate
Check who has signed the cheque, find out the authorised signatories when you set up the account, then if you receive a cheque with one signature that should have two or the signatures don’t match, question it? It is a “fraud” offence to issue a cheque knowing funds are not there to clear it, so by missing a signature some hope to get around this and the cheque being returned allows them additional time.
- Cheque not signed or Words and Figures Differ
This is another way of buying time. Always check a cheque, signature, date, words and figures match. Record cheque numbers if you receive one totally out of sequence, look at the quality of the paper, the print etc could it be a fraudulent cheque?
Cheques can be altered, check for initials, check the envelope especially the postmark is it the same town as your customer? Ask your customer to email or scan a copy of the cheque first so you can verify what you receive in the post.
Fraudulent cheques are more common for services or goods purchased at the time or in the case of “Pop up Businesses” when goods are delivered and a cheque handed over. The business moves out without easily being traced.
