Cheques and drafts | Royal Bank of Scotland

Cheques

When your business takes a cheque as payment, you should never release the goods until you’re absolutely sure the cheque is genuine, and won’t be returned unpaid.

Drafts

Just like cheques, drafts go through the normal clearing process. So if your business is offered a bank draft as payment, never release goods until you know for certain that the draft is genuine and has been paid. 

Protect your business

Always make sure you know who you are dealing with and remain vigilant at all times. Be alert to scams and any transactions which differ from the usual profile for your business. Always ask yourself whether explanations from your customer are credible. If a sale seems too good to be true then it probably is.

What to look for
Large orders or new customers – especially ones that don’t fit the normal pattern of your sales.
Easy sales – is customer too good to be true? For example, are they not even interested in the price or details about the goods?
• Indiscriminate purchases – does it almost look as if the customer doesn’t really care what they buy? If the goods could easily be sold on, you should be even more suspicious.
Pushy customers – be wary if a customer wants to take the goods right away, and presents you with a cheque or bank draft made out in your company’s name for the full asking price.
Customers that rush you – don’t be pressurised into releasing goods or funds without carrying out your normal, essential checks.
Next-day delivery – especially when the customer isn’t worried about additional costs. Be even more wary if the customer’s address is close to your premises.
Calls on delivery day – and want to know when the goods will be delivered.
Mobile numbers – a customer who will only provide either a mobile telephone number or an email address could be a scammer.
Overpayments – fraudsters will give you a cheque or bank draft for a value well above the asking price. They’ll then ask you to return the overpayment in cash or electronically, e.g. Internet Banking.
A payment that is remitted directly to your bank account without prior notification, or where the method of payment differs from what was previously discussed. For example if you are expecting an electronic transfer, when checking your account balance make sure this is the method used by the payer and be wary if payment is made by cheque or draft. Check that any payment to you cannot be returned before releasing any goods or funds.
Clearing Cycle scam.
Money Transfer Agency - if you are requested to transfer the money to a Money Transfer Agency rather than a Financial Institution, and / or if the funds are being remitted abroad.

Secure alternatives – explore the options
Make life more difficult for fraudsters. Electronic payments – like CHAPS, BACS and Faster Payments – come with built-in security and fraud prevention controls that you won’t find on drafts and cheques.

More information
Financial Fraud Action provides advice to help prevent cheque fraud.

Clearing cycle

Sometimes it’s difficult to understand when you can withdraw money after a cheque has been paid into your account. The clearing guide below helps you calculate when your money begins to earn interest, when money can be withdrawn from the account and when you can be sure that the cheque has cleared.

For example: If you pay a cheque into your account on a Monday, you can expect to earn interest (if the account pays interest on credit balances) two working days later on Wednesday (Transaction day +2). This is also the point at which this money will reduce the amount of your overdraft interest charged (if applicable). Funds can be withdrawn by day five, Friday (Transaction day +4). By the end of day seven, the second Tuesday (Transaction day +6) the money cannot be reclaimed after this time (i.e. as a result of a cheque being returned unpaid). Any unpaid cheques returned too late, i.e. after Transaction day +6, will not be debited to your account.

If you are ever requested to provide a refund to a customer, you should always wait until T+7 to be certain their original payment has cleared. A common scam linked to the clearing cycle is the 'Overpayment scam'.

More information on the overpayment scam

The Clearing Cycle Calculator

Transaction Day
(T)

Cheque is paid
in and the
credit appears
on the
customer
statement

T+2


Funds start to
earn interest

T+4


Although funds
can be
withdrawn, the
Cheque can still
be returned
unpaid up until
the end of the
business day T+6

T+6


At close of
business the
customer can
be sure that
the Cheque has
been cleared

Monday

Wednesday

Friday

Second Tuesday

Tuesday

Thursday

Monday

Second Wednesday

Wednesday

Friday

Tuesday

Second Thursday

Thursday

Monday

Wednesday

Second Friday

Friday

Tuesday

Thursday

Second Monday

Saturday / Sunday

Wednesday

Friday

Second Tuesday

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