Checks are widely used and accepted as a form of payment as history proves. Although checks have changed over time and are a bit more complex, it still serve the same purpose to payment.
Whether you like it or not, you will most likely end up having to write one for business or personal use. There are many important steps when it comes to writing a check, but the most the most important is endorsing it. This step makes it payable to someone or to accept responsibility for paying.
Take a few minutes out of your day to learn how and why to endorse a check. Who knows, you might learn something that you didn’t already know!
Table of Contents
How to Endorse a Check
- Matching names: To be endorse a check, you must sign the front and back of a check. The name signed on the back needs to match the payee name written on the front of the check.
- Where to endorse: Most checks have a dedicated section, marked with lines and instructions saying “Do not write, stamp, or sign below this line.”, for you to write in.
- Blank endorsement: The easiest way to endorse is to simply sign the check without adding any restrictions. This is known as a blank endorsement where you just sign your name in the endorsement area. But only do this if you’re about to deposit the check or cash it in immediately. If you’ll mail the check, deposit it at an ATM, or carry it around for a while, you should either leave the check unsigned until you’re ready to deposit, or add a restriction to the endorsement. This is pretty risky because somebody else can steal the endorsed check and cash it or deposit to a different account.
- Restrictive endorsement: A restrictive endorsement helps ensure that a check gets deposited into the right account. To use this method, include your account number with your endorsement, and provide instructions saying the money can only be deposited to your account. To do so, write “For deposit only to “account number”, as part of your endorsement. If the check is lost or stolen, it’s more difficult for them to get the money.
- Sign it over to somebody else: You can try to sign a check over to somebody else, effectively paying that person with the check you received. Be aware that some banks do not allow this type of endorsement because the technique is sometimes used fraudulently.
- No endorsement: You don’t always have to endorse checks. This method can help keep your information private. Check writers can often view images of processed checks, including the endorsement area, online after checks are paid. Nobody can see your signature or your account number unless your bank adds the account number during processing. Keep in mind that this method is only allowed in certain banks
Why to Endorse a Check
The reason to endorse a check is to authorize the bank to collect payment. When you get paid with a check, that payment is made to you. You’re the only person who can legally collect money however, you can turn that check into cash is by handing it over to your bank and letting them do the hard work.
Checks payable to multiple people: If a check is meant to be paid to you and somebody else, how does the endorsement work? It depends on how the check is written. If it has the word “and” between names, then everyone on the check must endorse it.
Checks to your business: Getting paid by a check as a business owner is slightly different. The check is payable to the business-not to you as an individual-so you will need to sign on the behalf of the business. To be able to handle this transaction, you must be authorized to hand the funds for the business.
FBO Checks: These are simply checks made payable to one part for the benefit of (FBO) another must be endorsed by the first payee. An example of this can be see as a check made payable to a retirement account custodian for a rollover transaction. The custodian will handle the check.
As stated earlier, you can deposit a check without endorsing it. Banks and credit unions regularly accept unendorsed checks but you should always make sure ahead of time. Mobile deposit endorsements are also an option.
You can deposit checks via your mobile device, on your bank’s app. The bank may request that your endorsement indicates that that you’re making a mobile deposit.
Why Do You Need to Endorse Checks?
When you earn your payment for working, that payment is made to you. Therefore, you are the only person that can legally collect the money from the check writer’s account. The easiest way to turn that check into cash (or money you can spend from your checking account) is to let your bank deal with it.
When you endorse (sign) your check, you authorize the bank to collect the money from the check writer’s account. The bank has the right to act on your behalf and negotiate the check.
On the other hand, you can still deposit a check without endorsing it, assuming the check is small enough. However, the account that it is deposited in must match the payee name, and it must not be from an insurance company or other organization that requires endorsement. Any bank or credit union will normally accept unendorsed checks with no issues.
If it is essential that you receive the check, it is better to be safe than sorry. No matter which method you end up going with when endorsing your check, you should wait as long as you can before signing a check. You should wait to sign while you’re at the bank or while you’re in the process of making a mobile deposit. Endorsing the check and it getting lost can result in somebody else trying to depositing it into their account.
Mobile deposit endorsements: If you decide to deposit your check through you bank’s mobile app, you will follow a separate set of instructions. The bank may request that your endorsement shows that you’re making a mobile deposit. In some cases, you can deposit your check without endorsing the check, but the safest bet is to honor the request if the payment is important.
Now that we have gone through how and why you should endorse a check, we hope you’ve learned something new by reading this! They are an essential aspect to businesses and personal use. Next time a check comes to you, you will know exactly what to do.