How to Sign a Cheque : Pro Tips to Follow

How to sign a cheque or to be more precise, third-party cheque is a personal or business cheque that is signed over as payment to another person.

Signing a cheque can be even helpful when you have a cheque that was written to you and you require to pay someone else with it for any purchases made by you.

Procedure : How to Sign a Cheque

  • Planning Before Signing
  • Signing Over the Cheque
  • Looking into Alternatives

Planning Before Signing a Cheque

Consider your options. As banking and identification security regulations in the world is increasing, you are most probable to face difficulty to find a bank that will accept a third-party cheque. Having a bank account where you can deposit or cash the cheque written to you, is a blessing. It is almost certainly the best option and makes it easier for you to have financial assistance. It is easier to write your own cheque or hand the cash to the third party through a bank. Signing over a cheque seems like to be more convenient by closing the loop for the middleman and its commission.

Try to check into electronic transfers of funds to the third party, may be through the existing bank accounts or through a service like PayPal as convenient option. Check about the prospects when you:

  • have a cheque written to you
  • don’t have a bank account
  • require to pay a third party the amount of the cheque written to you.

Do confirm about the person you wish to endorse the cheque to, the third party, will accept a signed cheque. It is better to ask the person if whether he/she has used a third-party cheque at his/her bank before this transaction which they both wish to make. This will help with your chances of success, because basically, as such there are no laws that require banks to accept third-party cheques.

cheque software

Try to confirm that the third party’s bank do accept these type of cheques and get to know about the bank’s particular procedures for this kind of transaction. In case you unable to contact the person immediately but have the whereabouts of his/her bank branch, you may yourself call the bank’s customer service number to inquire about special endorsements and procedures thereof, of this kind. Ask for any procedure that is required to act upon by the user/customer sop that the acceptance by the bank can be given for the third-party cheque. Banks enact their own rules to govern these procedures, like requiring that both parties must have accounts at the bank to ensure the funds can be transferred.

Be prepared to go in person with the third party to his/her bank. For the completion of the signing process in person, it may be required by the bank that you must be present therein-person. It will almost certainly improve your chances of success regardless. You must bring proper identification especially, in case it is not your home bank.

Part 2 : Signing Over the Cheque

Sign the back of the cheque as usual. Keep the signature in the top section of the endorsement area where they provide with three lines, sign the top line. You must not show off your flamboyant styled signature, as you will require the entire space to complete the process. So keep it restrained to one-line only.

Print “Pay to the Order of” and the third party’s name in the middle section or second line of the endorsement area. If you are little on space, you may try using “FBO” – For the Benefit of, but you must check about this with the bank official first. Write the third party’s name neatly. Do the spell check.

Do not have the third party sign the cheque until it is deposited or cashed. Get the third party or the endorsee sign the cheque in the bottom section or third line of the endorsement area. If the third party is not present, place an “X” to indicate where they should sign or attach a friendly sticky note to the cheque.

Give the cheque to the endorsee to deposit in his/her bank as usual. So long as the bank accepts the third party cheque, the deposit process should be exactly the same as for a cheque written directly to the person.

Part 3 : Looking into Alternatives

Open a bank account to deposit the cheque and pay the third party. As you must have noted, you have only considering signing a cheque as you do not have a bank account. You must consider opening an account as it will make the situation of understanding and trusting each other simpler.

To open a cheque account at a bank, you generally required to be 18 or older. You must provide basic information like your full name, address, contact information like phone number or email, and Identification number. You must provide a government-issued photo ID.

You must try to open a no-fee cheque account at a local bank. Also look for online banking facility, where free cheque accounts are more likely to be available.

Ask the original cheque writer to void the cheque and write a new one to the third party. You must write a neat and clear cheque to any corporation.

Ask the original cheque writer to add “or bearer” after your name on the cheque and future cheques written to you. Cheques with “or bearer” written following the name of the payee can be deposited or cashed typically, depending on bank policies by whomever presents the cheque.

The third party must be prepared to offer identification while depositing or cashing the cheque. It depends on the policies of the financial institution, especially for a cheque which is presented for a larger amount. Cheques written out to “cash or bearer” or just “bearer” will work on the similar lines.

It is better to use a cheque-cashing service. You have to pay a fee in return for such a service. But, after all the identification process is over, you will walk out of the bank with cash that you may use to pay the third party. Cheque-cashing charges generally range between 1% and 12% of the cheque amount. It is better to shop around for the best deal so as to pay off. Some international retailers, like Walmart, offer this service. You will require to provide a photo ID to cash the cheque.

Through the above article, you must have understood the whole process of signing a cheque.