Handling drafts and cheques
While we don't usually recommend drafts and cheques, there are some basic principles you can apply to make the process as simple and cost efficient as possible.
- Submit sterling cheques and drafts drawn on banks abroad, or foreign currency cheques and drafts drawn on the UK to be cleared on your behalf
- Reduce costs by including multiple cheques and drafts in the same transaction. These need to be in the same currency, drawn on banks in the same country, for negotiation.
How to receive funds
Payment by negotiation, purchased with recourse
Payment by negotiation can only be used if the draft or cheque is in the local currency of the country on which it is drawn (for example, US dollars payable in the US).
Even so, we might still have to send it for payment by collection.
We will credit foreign currency cheques to your account within five working days after receipt of the cheque - but only once agreement to negotiate with recourse has been made.
We will normally pay you the value of the draft or cheque, less our charges. If necessary, we will use a cheque-buying rate for currency conversion.
The charge for payments by negotiation is 0.25% per item. The minimum charge is £7, and the maximum charge is £45.
If the payment is not honoured by the paying bank, we will debit from your account the value of the draft or cheque, plus a handling fee.
If a batch of cheques are sent in together to be credited for the same client, due to limits relating to negotiating cheques some of these may be sent via negotiation and collection and will therefore credit to the account at different times.
Payment by collection
Sometimes we have to send a draft or cheque for collection. Examples of when we have to do this include:
- If the payment comes from a country with a high risk rate
- If it is not in the local currency of the sender's country (for example, US dollars payable in Greece)
We send the draft or cheque to the bank on which it is drawn. We will not credit your account until we have received the money or have been assured that it will be paid.
Unfortunately, this can take some time - it depends on the country the payment is coming from and the bank clearing the payment.
Wherever possible, ask for sterling drafts drawn on a UK bank. These can then be paid directly into your account.
The charge for payment by collection sent abroad is 0.25% per item (minimum £20, maximum £70) plus agent's charges.
The charge when the payment by collection is sent to other banks in the UK is £12.00 per item, plus agent's charges.
Foreign cheque endorsements
All foreign cheques drawn on the following countries must be endorsed by the payee, i.e. the person to whom the cheque is made payable must sign the reverse of the cheque in order for the bank to obtain payment:
The payee must:
Print their name on the back of the cheque, exactly as the name appears on the front of the cheque, for example, a cheque made payable to Jane Smith must be printed as Jane Smith, not J Smith. The payee must then endorse the back of the cheque with their normal signature.
If the cheque is made payable to a company an authorised signatory should sign the reverse of the cheque, stating their position within the company and printing 'For and on behalf of (company name)'
Should the cheque not be endorsed this will be returned back to the customer to be endorsed, who will then need to return this back to the Bank for clearing.