Cheque payment security

• Ordering, receiving and storing cheques
• Non-standard printed cheques

Ordering, receiving and storing cheques

• You should limit your cheque book orders to avoid holding too large a stock of cheques, as their design and layout may change regularly to keep up to date with evolving technologies.
• If you haven't received cheque books that you've been expecting, contact the bank to verify that they have been dispatched.
• When you receive a supply of new cheques, check through the books to make sure that no cheques have been removed en route.
• Record the new cheques in the usual manner and store them securely. See the Office Security area for more details.
• Always keep cheques in a secure place separate from the bank mandate.
• Never leave cheques lying around unattended in public areas.
• Regularly check that all unused cheques remain in the book and that none have been removed from the middle or towards the back.

Non-standard printed cheques

• If you wish to customise your business cheques, note that there are stringent anti-fraud and other industry standards that must be incorporated into all cheque designs. We can provide guidance on this.
• Avoid placing non-essential information on your printed cheques.
• Don't show any signing instructions on the cheque, such as signing limits.
• You may also wish to avoid labelling the signature area with designations such as 'Director' and 'Secretary', as this may give potential fraudsters valuable information on your company signing arrangements.

• Writing cheques
• Sending cheques

Writing cheques

• Use cheques in serial number order, making sure that all cheques remain in the book and that none are removed from the middle or back.
• Begin writing or printing at the very left of the cheque and use reasonably large size writing or printing font.
• When issuing a cheque to a large organisation such as HM Revenue & Customs or a bank, do not make the cheque payable simply to that organisation. Add further details on the payee line, for example 'HM Revenue & Customs re. JJ Jones Acc Ref 1234567'.
• Draw a line through unused space on a cheque, so that unauthorised people cannot add extra details.
• Don't leave large spaces between words and put a line through the space not used after the words in each line.
• Don't leave a space between the £ sign and the amount inserted in the figures box, and put a line through any spaces not used after the numbers.
• Always account for spoiled cheques and destroy them.
• Avoid abbreviating the payee name.

Sending cheques

• When sending a cheque by post, make sure that your envelope doesn't advertise the contents.
• Bear in mind that the address on the envelope may make it obvious to a fraudster that there is a cheque involved – for example 'HM Revenue & Customs'.

• The risks of posting a cheque:

  • Financial loss to your company - where a customer is the drawer of a cheque which has not been altered and paid into an account other than that of the intended beneficiary (i.e. Payee), there is no liability on the Bank to pay the cheque / or reimburse the customer, as it has been issued in accordance to the mandate.
  • Reputational risk to your company - the intended beneficiary may issue legal proceedings against your company for non payment

  Good Practice:

  • Avoid using window envelopes when posting cheques, this makes it an easier target for fraudsters
  • Set up a BACs / Bankline or Online payment to pay regular suppliers and Government bodies e.g. HMRC
  • Consider sending high value cheques via secure mail e.g. Recorded / Registered Delivery

  Alternative Payment methods:

  • Electronic payment methods
  • Bankline

• For high value payments consider using an alternative means of transfer in preference to cheques, e.g. Internet banking or use a secure method of delivery.

• Reconciliation issues
• Help with reconciliation

Reconciliation issues

• Match the frequency of your reconciliation to the volume of cheques you produce. For example, if you issue cheques daily, you should reconcile often.
• Report any unrecognised transactions to the bank.
• It's best practice that the person reconciling the cheques should not be the same person who writes or authorises the cheques.
• To reconcile, make sure that you compare underlying paperwork with all cheques written, to verify that cheques are only raised for legitimate purposes. At the same time, undertake an audit of your cheque stocks.
• Any cheques that have not been presented after a reasonable time should be investigated. For example, a cheque that is missing could have been stolen. A cheque that is presented later than expected may have been ‘borrowed' and the information taken for use in a future fraud.
• If a cheque is overdue for presentation, follow up with the payee, check for receipt and place a stop on the cheque if necessary.

Help with reconciliation

With the advent of faster, cheaper and more secure electronic payments, you may wish to discuss more efficient payment methods for your business with your relationship manager.

However, we recognise that many customers still have a need to issue high volumes of cheques. There are a number of reconciliation services available to help you – please contact the bank for more details.