More and more businesses are experiencing the situation where payment is made by way of a cheque drawn on the account of an individual or entity that is not the original customer. The question is often asked what are the consequences of accepting and lodging a cheque for payment that is drawn on an account that is not your customer’s account.
 
What happens is that an account is opened in the name of a sole trader or partnership and then over a period of time the debtor starts paying by cheque in the name of a limited liability company and these are subsequently cashed by the creditor in settlement of a debt on an ongoing basis. The creditor may be taking on a different credit risk to the one originally signed up.

 

 

Do you think the banks should withdraw the use of cheques completely as is their current plan?   [Yes]                   [No]