Avoid Cheque Mistakes: How to Fill a Cheque Securely and Accurately

How To Fill a Cheque?

Synopsis

A cheque is a widely-used financial instrument for making payments to individuals or entities. The most common types of cheques are bearer and order cheques. Proper care should be taken while filling a cheque, as errors or overwriting may cause banks to reject it. Even in today’s digital age, cheques remain popular for financial transactions, and understanding how to write one correctly is essential.

What Is a Cheque?

A cheque is a written directive that instructs a bank to pay a specific sum of money to a named individual or entity. It serves as a safe and convenient method for transferring funds. In India, the issuance and usage of cheques are governed by the Negotiable Instruments Act, 1881. Cheques are extensively used for personal as well as business purposes.

Different Types of Cheques

Here are some common types of cheques:

1. Bearer Cheque:
   A bearer cheque can be encashed by anyone holding it, whether or not they are the intended recipient. This cheque does not necessarily specify a payee’s name, making it transferable simply by handing it to another person.
2. Order Cheque:
   An order cheque is payable only to the individual or entity whose name is written on the cheque. Before depositing or encashing, the payee must endorse the cheque on the reverse side.
3. Crossed Cheque:
   A crossed cheque has two parallel lines on the top left, often with the words ‘A/c Payee’ written between them. It can only be deposited into the account of the specified payee and cannot be cashed directly.
4. Post-dated Cheque:
   This type of cheque is dated for a future date. It cannot be cashed or deposited until the date mentioned on the cheque has passed. Post-dated cheques are often used for scheduled payments like loan installments or advance agreements.

How to Fill a Cheque?

Filling a cheque is a simple process but requires attention to detail. Follow these steps:

1. Date:
   Write the date on the top right-hand corner of the cheque. Depending on the purpose, this could be the current date or a future date for post-dated cheques.
2. Payee’s Name:
   On the line marked ‘Pay to the order of,’ write the name of the person or organization you are paying. For crossed cheques, you may add two parallel lines to ensure it can only be deposited into the payee’s account.
3. Amount in Figures:
   In the box on the right side, write the exact amount you are paying in numbers, ensuring clarity and the use of commas where appropriate (e.g., ₹5,000).
4. Amount in Words:
   Below the payee’s name, write the payable amount in words. Begin with “Rupees” followed by the amount. For example, if the amount is ₹5,000, write “Rupees Five Thousand Only.”
5. Signature:
   Sign the cheque at the bottom right-hand corner. This signature verifies that you have authorized the payment.

Important Points to Keep in Mind

Here are some important points to remember when writing a cheque:

1. Accuracy:
   Double-check all details like the payee’s name, date, and amount in both figures and words to avoid errors. Any overwriting or corrections can lead to cheque rejection.
2. Security Measures:
   • Never sign a blank cheque.
   • Avoid leaving any field incomplete.
   • Store your cheques securely to prevent misuse.
3. Sufficient Balance:
   Ensure that your account has enough funds before issuing a cheque to avoid cheque bounce charges or penalties.
4. Record-Keeping:
   Maintain a record of all issued cheques in the provided index section of your cheque book. This helps in tracking transactions and resolving disputes.
5. Voiding a Cheque:
   If you make a mistake or need to cancel an unused cheque, write “VOID” across the cheque in large letters. This ensures it cannot be misused while still keeping it for your records.

Best Practices While Writing a Cheque

To avoid issues like cheque rejection or misuse, follow these best practices:

• Clarity:
  Write all details clearly and legibly.
• No Overwriting:
  Avoid overwriting, as it may lead to rejection by the bank.
• Secure Usage:
  Cross your cheques with two parallel lines and include the words “A/c Payee” if you want to ensure the cheque can only be deposited into the payee’s bank account.
• Timely Deposit:
  Be aware of the cheque’s validity period, which is generally three months from the date of issue. Ensure the cheque is deposited within this time.

By adhering to these steps and precautions, you can confidently write and issue cheques, ensuring smooth and secure transactions.