What is a check, what is it for and what types are there?

Did you know that there are different ways to handle or collect money apart from cards and uncomfortable cash? For large amounts of money, chequesDocuments that are used as a means of payment and that allow monetary transaction between various individuals through financial entities (banks), may be an appropriate option. However, there are various types of checks, as well as a suitable way to endorse such a document.

Find out in this note the different types of checks that there are, what they are for and what important differences they have so that you can carry out your issuance or check cashing appropriately.

What is a check?

The check is a document that contains an unconditional order to pay a specified sum of money to the holder. The check must be presented for payment within 15 days, which will be 20 if the check is issued in any European country and 60 for the rest of the countries.

These types of documents are issued and signed by a person so that a financial institution pays the amount consigned in it to another individual, as long as they have funds in the account assigned in the check.

What is a check for?

The economic function of the check is to be a means of payment between companies, etc., for significant amounts of money. It is a practical and recurring way. In addition, the following is necessary for the issuance of a check:

• That there are funds in the bank available to the drawer and that they are sufficient for the payment of the check.
• That there is an agreement between the drawer and the bank to dispose of those funds by issuing checks. This agreement is generally linked to a bank contract.

Types of checks

• Check to bearer: The bearer check is one of the types of checks that does not specify for whom it is directed, or in any case it has the phrase “To bearer” in the section pay to …, which indicates that the check can be cashed by anyone who presents the check to the responsible financial institution.
• Cross check: The cross check has two parallel and diagonal lines across the front, indicating that the check cannot be cashed in cash, but rather must be deposited into a bank account.

• Certified check: For security reasons when it comes to payments, many companies choose to request certified checks when it comes to receiving payments. In that case, the bank certifies that the account issuing the check has funds, and reserve those funds until the check is cleared and payment is made.
• Check to order: A check made to order is one of the types of checks that the beneficiary of the check can cash, but they can also endorse it with their name, signature and ID. for someone else to charge for it.
• Check not to order: A check not made to order cannot be endorsed for any reason; can only be collected by the beneficiary whose name must appear in the section pay to … It is one of the most used checks because it is more secure.

• Cashier’s check: A cashier’s check is a check issued by a credit institution so that be paid at their own branches. Generally, it is used by loan banks and similar institutions.
• Traveler’s check: This type of check is widely used by tourists who travel within or outside the country to avoid carrying cash. It consists of being issued by a bank in the country of origin to be collected at a branch inside or outside the country.

• Cancellation check: The cancellation check is a type of check that instead of being issued to be cashed is issued as a means of payment equivalent to the delivery of cash. It is generally done between companies, although it is also done for natural persons.
• Cashiers check: The Management checks they are a guaranteed money order issued by the bank. They can be collected at any of the offices of the financial institution or deposited in bank accounts, as well as in other banks.

What checks can be endorsed?

Only the checks that are made out to the bearer and the nominative ones, which bear the written name of the beneficiary, are endorsed. Rather, a check stamped “Not negociable”It cannot be endorsed: it can only be collected by the person for whom it has been issued. This rule protects the check issuer from being cashed by third parties.