The checks are a type of title value in which the order of payment of a certain amount of money is set to a banking institution . There are several types of checks that can be used to change or deposit money and one of them is known as an endorsed check .
An endorsed check is a bank- type document that can be delivered to a third person by the beneficiary of the check so that the latter has the possibility of making it effective at the bank.
As for the term endorse , it is important to understand the concept of endorsed check even better , it has a peculiar meaning, it can mean bill of exchange , security , promissory note or transfer .
- Endorsed check characteristics
- What is it for
- How to endorse a check
- What information should an endorsed check carry?
- How an endorsed check is cashed
- Importance of the endorsed check
Endorsed check characteristics
Among its most representative characteristics are the following:
- The signature of the check must also be placed on the back of the document.
- Endorsed checks can become signed on several occasions .
- Only bearer checks or checks known as made to order can be endorsed .
- The only checks that can be endorsed are those that have the phrase “to order” included.
- Checks can also be endorsed by legal entities .
- This type of check is only valid when the signature belongs to the person who gives the authorization to change the money.
- The person who has the check in their possession is known as the endorser .
- The full name and surnames must be placed on the document , in addition to the identity document number .
- The endorsement is made for the total amount indicated on the check, therefore it does not accept partial payments.
What is it for
Endorsed checks are documents that serve to transmit all the rights that happen to be inherent in the check to another person . It is very functional in those cases in which the person to whom the document is addressed cannot attend the bank office to change the money, so it is easier for them to find someone they trust to make the change or deposit of the same.
How to endorse a check
In order to endorse a check, the person who receives the check or to whom the check is addressed, must put the name of the person who will cash the check and must also sign the document on the back of it and then deliver it to another person to be the one who has the capacity to collect the title.
When the check is endorsed by a legal person , then the document must complete the endorsement process using the expression “ by proxy ” or in its acronym “ pp ”, in addition the name of the company must be clearly and legibly indicated . For a nominative check to be endorsed , it is necessary that the phrase ” to order ” appears in the document.
What information should an endorsed check carry?
The following are necessary data that must be included in an endorsed check so that it can be changed:
- On the back of the check, the words ” pay to the order of ” or ” pp ” should appear.
- The name of the person who will be the collector of the document.
- The complete data of the original beneficiary.
- The signature .
- Address of the person to whom the check was endorsed.
- Identity document number .
- Some banking institutions also request a copy of the identification document for greater security.
How an endorsed check is cashed
In order to cash an endorsed check, you must first make sure that the signatures and numbers of the identity documents are written on the back of the document. Subsequently, you will only have to attend the bank to be able to cash the money, always carrying the respective identity document and a copy of it in case it is a requirement in the banking institution.
The endorsed check may also have an expiration period that occurs when the document is not changed within the date that had been established or when it exceeds the deadlines that have been established by law , also depending on the banking institution and the laws. from the country. Checks can also expire when the drawer does not have sufficient financial funds for the check to be cashed.
The stamps are placed on the endorsed checks in order to give them greater security and so that, in the event of a non – payment of the document, it is possible to go to the executive route more easily and quickly. This allows for greater security on the check as a drafting instrument. They are also the payment of the Tax on Documented Legal Acts , a tax that is in force in many countries.
Among the main advantages we can mention that this type of check can be cashed easily by a third person in case the beneficiary of the document cannot be present at the bank office. It is also a simple and efficient way to make payments .
Perhaps its main disadvantage is that only bearer and nominative checks , those that have the name of the beneficiary in writing, are the ones that can be endorsed. In addition, this type of check is subject to the tax known as Patrimonial Transmissions and Documented Legal Acts , a tax in force in most countries with some changes in its name and for this reason, it pays taxes .
In addition, the endorsement process can pose a risk when a check is lost , especially if it is a bearer check since they do not specify the name of the person in charge of changing the check, therefore, the check can be endorsed easily and changed by anyone in a bank.
Importance of the endorsed check
The endorsed check is important because it makes existing business relationships easier and more efficient. It is a fast means of payment that can be ideal for those who need to send a third person to collect the money.