How to Cash a Cheque and Get Direct Access to Your Money

cash a cheque

Cash comes in all different forms but, when it’s a cheque, how do you access the cash? Keeping your money safe and accessible is an important part of managing your finances. For example, if you receive a cash cheque as payment for goods or services, would you know what to do with it? If you are like most Kenyans, you probably don’t have much experience on how to cash a cheque. In today’s digital world, money has largely moved from physical to digital currency. But that doesn’t mean that cheques have become obsolete! In some circumstances, they remain the best or only option for making or receiving payments.

What is a Cheque?

A cheque is a financial instrument that allows you to transfer money to another person, company, or organization. It’s a written order to a bank to make a specified amount of money available to a specific payee. A cheque is a type of bill of exchange, an order drawn on a bank that is payable on demand, like a money order. It is a negotiable instrument, which means that it can be transferred from one person to another like a stock or a bond. Unlike a money order, a cheque can be drawn from any bank in any country, like a foreign exchange order.

how to cash a cheque

Method 1: Making Sure a Cheque is Cashable

Verify the trustworthiness of the person writing the cheque. If the person writing you the cheque is a close friend, you probably trust them to write a cheque that you can cash. If you are accepting a cheque as payment from someone you do not know, confirm the following information:

  • Full name
  • Home address
  • Phone number
  • Driver’s license number
  • Check with the bank the cheque will be drawn on to confirm that the person writing the check has an account with funds available to cover the check. Many banks will verify the account the cheque is drawing from if you contact them.

Make sure the check is made out to you. It is very important for your name to be written correctly on the cheque. Banks can deny payment if the name does not match that of the person attempting to cash it.

  • If you own a small business, different rules may apply. Many banks will not cash a cheque made out to your small business. They will deposit it to the business’s bank account instead.
  • If the check is made out to more than one person, all payees (the person or persons being paid) must sign the cheque.

Check for any endorsement problems.  All of the information on the cheque needs to be complete and accurate. This includes the date, amount of payment, and signature. If the information is invalid or missing, your bank will refuse to cash a cheque.

  • Check the date. It is important that the date is accurate. The date written on the cheque is the first date at which the funds may be withdrawn. Also, many banking institutions have the right (but not the obligation) to deny payment after a period of six months has passed.
  • Check the numerical amount and written amount. The numerical amount box is located below the date. It represents the exact amount to be paid to the payee. You must make certain that this is the correct amount you are owed and that it matches the written dollar amount located to the left of the box. If the written and numerical amounts are different, most banks will honor the written amount.
  • Check the signature. For the cheque to be valid, it must contain the signature of the owner of the account from which the funds will be withdrawn. It is imperative that it is signed or the cheque will not be honored

Endorse the cheque. On the reverse side of the cheque, there will usually be a line for a signature that says something like “Endorse here.” You must sign on this line before you can cash a cheque. Remember that if there is more than one payee — e.g., “Pay to the order of Jackson and Leanna Teller” — all payees must endorse the cheque.

  • A cheque can be deposited into a joint account with only one of the joint owners signing the check.
  • Once the cheque is endorsed, unless there are written restrictions, the cheque becomes a “bearer” instrument so that anyone can cash it.

Method 2: Cash a Cheque at Your Own Bank

Find your nearest branch location. Many larger banks have multiple locations. You can find these locations by checking your bank’s website, calling them on the phone, or searching online.

Bring a valid photo I.D. When you cash a cheque in person, you will be required to show a valid photo I.D. Driver’s licenses and passports are usually the best choices. In some cases, military or school I.D.s may be accepted.

  • You may not be required to show a photo I.D. if you cash the cheque at an ATM or via your smartphone.

Take the cheque to your bank. Any teller can take the cheque and give you cash. Many banks will cash cheques without charging a fee if you are an account holder with them.

  • Some banks may require you to deposit the cheque to your account rather than cash it. This is particularly likely if the cheque you are trying to cash is written on an account from another bank.
  • If the bank on which the cheque is drawn refuses to pay your bank, in other words, the cheque “bounces”, your bank will reimburse itself from your bank account. Banks will also usually charge a fee for the trouble of dealing with a returned cheque.

Cash the cheque with a teller. The traditional way of cashing a cheque is to stand in line and wait for a bank teller to assist you. Make sure you have a valid form of photo identification with you.

  • Many banks prefer that you have your bank debit card with you as well. If you do not have your debit card, you may be required to fill in additional forms to cash your cheque.

Cash the cheque at an ATM. At many larger banks, you can cash a cheque at their ATMs (Automatic Teller Machines). The funds are usually available immediately.

  • In most cases, you will need your bank debit card to deposit or cash a cheque at an ATM. The debit card identifies your account so that you can deposit or cash your cheque.
  • Make sure you endorse the cheque before inserting it into the ATM.

Deposit the cheque electronically. Many banks now allow you to deposit cheques into your account using a smartphone. The process may vary between banks, but it usually involves downloading the bank’s app and using your smartphone camera to take a photo of your cheque.

  • Make sure to follow all the directions in the app.
  • Take a clear, well-lighted photograph of the front and back sides of the cheque.

Cheque Discounting in Kenya

Cheque discounting is a way for businesses to get their hands on some cash quickly from various banks and other financial institutions.

These financial institutions will buy your cheques and then collect the payment from the original payer over a certain period of time. For example, you might find yourself in need of Ksh. 1,000,000 right away—cheque discounting would allow you to access this KES 1,000,000 without waiting for people to pay you back.

It’s also worth noting that businesses that use cheque discounting in Kenya don’t have to wait for all their customers to pay them before they can receive money. It works by paying out a set percentage of the total amount, plus fees that the business agrees on with the bank at the beginning of the process. The customer pays back the bank as per their agreement with them and is not obligated to pay any interest or any additional fees.

How Does It Work?

An account holder will give a cheque to Mwananchi Credit, a financial institution. Mwananchi Credit will then purchase the cheque from the account holder and then collect payment for that cheque over a period of time.

So, how do you know what you’ll be charged for a particular cheque? 

There are two ways to find out:

  1. You can talk to us about the cost of a particular cheque before you actually make it.
  2. You can ask your customer what they’re willing to pay for the cheque before writing it.

You’ll want to keep track of how many transactions you write as well as how much is written on those transactions, as these factors will affect your final cost per transaction. If you process 50 transactions per month and each transaction has KES 100,000 written on it, your ongoing monthly fee would be KES 100,000 plus KES 500 per transaction (50 x KES 500).

Cheque discounting is an excellent option if you need quick cash and don’t want to wait until customers come in and pay their bills!

Cheque Discounting In Nairobi

Mwananchi Credit LTD is the leading financial institution in cheque discounting in Nairobi Kenya. We buy cheques from businesses and then collect payment for those cheques from the original payers (customers) over a certain period of time. Get in touch with us via a call or email to find out how your business can benefit from this service.

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