Instructions on Endorsing a Check to Someone Else

A business transaction is an economic activity, which is done in a systematic manner, by following proper rules and business ethics, with the purpose of earning profit. The main purpose behind starting a business activity is earning profit, and a lot of small firms and privately owned organizations don't follow the right methods of business transactions, in order to earn extra profit, by not paying taxes, selling goods and services without the use of invoice, and by making cash transactions.

It is always advisable and ethical to make use of a check, while doing even the smallest of business activities. It not only helps the person to be clean with his transactions, but also helps in maintaining the records of his day-to-day expenses, income, and accounting, all of which become much easier.

A checkbook is given to a person when he opens a bank account, as the bank expects the person to make the maximum use of it, to keep his records clear. A check is a bill of exchange that orders payment of money. The person endorsing the check normally holds a checking account, where the money is saved.

The endorser of the check fills up various essential details on the check, such as date, amount, name of the firm or name of a person the check is being made to, etc. In the end, it is followed by his signature, and if it is an organization, the check needs to be stamped as well. An endorser is a person or a firm, who by signing on the check, transfers the right to another person. However, this is restricted to the check amount only.

How To Endorse A Check To Someone Else

Before endorsing, one should keep four important things in mind.
Drawer: This is the person or organization which makes the check.
Payee: This is the person or organization who will be receiving the amount mentioned on the check.
Drawee: This the person or organization from whose account a check or other order for payment is drawn.
Amount: This is the money or currency amount which the payee will receive.

Instructions for Endorsing the Check

1. One should be sure that the front of the check has correct and precise information, which includes the date, amount, signature, and name of the person or organization it is being endorsed to.
2. When the check is turned over, at the back, there should be endorsement lines on one end. The area below the endorsement should be left for the bank to fill up with some important details.
3. 'Pay to the order of' should always be written on the first line, followed by the name of the person to whom the check is being endorsed to. However, these days, it is already printed on the checks. This should always be taken care of, while endorsing a check to a third party.

Precautions While Endorsing the Check

1. While endorsing a check, a person should always make use of a pen, and not some temporary ink or a pencil which can be easily erased.
2. While making any change to a name or the amount mentioned, it is always necessary to sign next to it, and then make the change again. If there is a major mistake, it is always safer to make a new check.
3. A check should not be endorsed with a blank endorsement. This is because, if the check is lost, someone else can deposit it into his own account, by filling up his own details on the blank line.
4. It should never happen that the amount column is left blank, when one is endorsing a check for someone else to cash.