Formed cheque: are you sure your business is interested?

The conformed cheque can be easily distinguished from a bank cheque by its reverse side. It contains the conformity clause, a guarantee that makes this type of cheque one of the preferred forms of payment for those who wish to ensure the collection of an amount due.

However, From both the debtor's and the creditor's point of view, the conformed cheque entails some disadvantages. Considering its cons as well as its pros will help to decide whether or not it is the right payment method for the company.

What is a cheque?

The cheque is a type of document that represents a payment order.. There are many types of cheques, such as bearer cheque, crossed cheque, nominative cheque, bank cheque or certified cheque..

What is a conformed cheque? Definition and concept

The conformed cheque is a payment instrument that states the payee, This is in contrast to a bearer cheque, for example, and also to the drawer, who decides by this means of payment to settle an outstanding debt to the drawer.

Moreover, unlike, for example, the bank cheque, ensures that the amount receivable will be in the drawer's account available to its beneficiary.

Characteristics of the conformed cheque that help you identify its validity

For a cheque to be considered valid, a number of characteristics must be met, including the following:

• Indication of the place and date of issue.
• Name of beneficiary.
• Determination of the amount payable on demand.
• Certification, endorsement or denomination of conformity with the signature of the drawee bank.

Did you know the characteristics of the conformed cheque? Have you ever held an incomplete one in your hands?

Bank cheque or certified cheque?

There are certain safeguards for the holder of the cheque that has been drawn up. which suggest that it is an interesting option, more advisable than the bank cheque:

• The certified cheque obliges the bank to pay the amount indicated. in the document, except in cases of bankruptcy or seizure. This guarantee ensures satisfaction of payment to the policyholder.
• The bank cheque may end up resulting in non-payment. if, for example, the drawer had no funds in the account.

Disadvantages of the conformed cheque

However, There is a disadvantage for the creditor that is never present in the case of a bank cheque, and it has to do with the time limit for collection:

• The conformed cheque states the date of issue. and, from that moment, only fifteen days are available to collect the amount. The bank then releases the amount it has withheld from the drawer.
• The bank cheque does not impose a time limit, so it can be cashed at any time.

For those who use the cheque as a means of payment, there is also a major drawback:

• The conformed cheque requires the drawee bank to hold the amount specified in the document for fifteen days.. Within that period, the debtor may not dispose of the money.
• With a bank cheque, the money is available until such time as the creditor has cashed his cheque and withdrawn the amount from the bank.

Taking these pros and cons into account, before resorting to the cheque as a means of payment, it is necessary to consider whether it is really the best option for the business., The following table sets out the types of cheques that are available, or whether it is preferable to opt for one of the other types of cheques available.