With today’s digital wallets and cryptocurrencies, the simple paper instrument called ‘cheque’ may seem something out of the prehistoric age–similar to vinyl records versus streaming services.
However, just like how vinyl has become popular once again among music lovers, cheques have not lost their charm and practicality.
Cheques continue to be relevant and essential in today’s complex and diverse economy, being good for different industries, including art, logistics, transportation, design, and luxury.
In this article, we’ll explore the various types of cheques and how you can maximize their use in various aspects of your life.
Let’s cheque them out!
What Is a Cheque?
A cheque is a document that represents a written, dated, and signed instruction given to a banker to pay on a specific date a stated sum of money to the bearer or a specified third party.
This is a common form of payment system that has been in practice for both commercial and civil transactions. Banks usually need to authenticate the cheque written, as well as authenticate the cheque bearer’s identity, in order to ensure that what is written on the cheque is correct and real.
This includes details such as:
- Date
- Payee name
- Amount in numbers
- Amount in words
- Signature
- Memo/For (optional)
Different Types of Cheques
Let’s get into the forms and uses of cheques for different situations.
1. Bearer Cheques
Bearer cheques are cheques payable to the bearer who presents them at the bank. It can be encashed by anyone presenting the cheque to the bank.
Bearer cheques provide immediate access to cash when urgently needed, such as during emergencies or unexpected expenses where electronic transfers or debit cards may not be accessible.
2. Order Cheques
Order cheques are issued to a particular individual or organization by the name featured on the cheque. The payee has to endorse the cheque during the cheque transaction when cashing it out, adding a relative security measure.
You can use this type of check with design commissions and pay artists and designers to ensure the money gets to them safely. It is also useful when you need to allot costs for art shippers.
3. Crossed Cheques
A crossed cheque is one that has two parallel lines crossing its face – organizations that issue crossed cheques have to deposit the money into their account as opposed to encashing the cheque as they would cash.
4. Open Cheques
An open cheque, or an uncrossed cheque, can be encashed at the counter of the banker through whom it is drawn and as many times as the person wants, without needing the name of the specific person to be paid.
Open cheques can be used in transportation and logistics since they may be required in an emergency such as in refueling or repair. Moreover, when budgeting for moving, you may need to allot different costs to be prepared.
5. Post-Dated Cheques
Post-dated cheques are issued for encashment in the future, hence they cannot be encashed at present. You can encash only at the date indicated in the cheque (or after). These are useful for scheduled payments.
6. Stale Cheques
These are cheques that become void if not paid within a certain time period, often 6 months from the time of issue.
For industries involved in inventory, such as art galleries and design studios, stale cheques can help manage stock levels by ensuring timely payments to suppliers.
7. Traveler’s Cheques
Traveler’s cheques are prepared cheques that are authorized for definite quantities, making them popular among travelers. They are a safe form of carrying money, and they can be converted to the local currency available in the country.
Business travelers use traveler’s cheques to cover hotels, meals, and transportation expenses, providing a secure method for managing travel funds. This can be considered when you’re preparing for an art exhibition relocation and need to consider travel costs.
8. Banker’s Cheques (Pay Orders)
Banker’s cheques, also referred to as pay orders cheques, are issued by the banker and payee with the assurance that the money will be available for the payee to honor.
In the art industry, payments through banker’s cheques are recommended due to the fact that they help guarantee payment for expensive purchases.
9. Certified Cheques
Certified cheques are those in which the bank issuing the cheque conveys to the person or the drawer that they have enough balance in their account to honor the cheque, and the amount is set aside in the drawer’s account.
10. Electronic Cheques
E-cheques are another versatile type of cheque, which replaces traditional paper cheques. Electronic cheques are increasingly popular due to their convenience and speed, making them suitable for a variety of uses across different industries.
11. Voided Cheques
A voided cheque carries the word void across the face of the cheque to signify that it should not be honored for payment. When looking at voided cheque examples, one can see the word “VOID” across the front of the cheque, so the account holder ensures that it cannot be mistakenly processed.
Despite not being used for direct financial transactions, it can be used in situations such as employment. Voided cheques are commonly used by employees to set up direct deposit of their salaries and accurately input the bank account information into the payroll system, ensuring seamless and accurate salary deposits.
Conclusion
Just like vinyl records, cheques are still popular and being used.
It may be used for paintings purchase, a design project in which payment is split into phases, and more. Cheques still have a major role in money transactions and continue to evolve alongside technologies, maintaining their position as essential tools for managing finances securely and effectively.
Don’t waste cheques and make sure you use them to your advantage today.
