When someone writes a check to you or your business, you may need to endorse it before cashing or depositing it. This is a security measure meant to verify that you’re the intended recipient. Otherwise, without a proper endorsement, the check could be declined.
From the start, the process of endorsing a check seems simple and straightforward and it is, because it’s essentially you putting a signature on the back of the check.
However, it can get complicated quickly if you make an error. Below are the key points to keep in mind before you endorse a business or personal check:
Match your names: For the check to be valid, the name on the endorsement (back of the check) must match the one on the front (payee’s name). If your name was incorrectly written, then you’ll need to sign the check with the incorrect version of the name and then sign it a second time with the correct version of your name.
Find the endorsement area: Checks typically have a 1.5-inch line on the back where the payee can endorse. Oftentimes you’ll see it labelled as “Endorse Check Here” or simply “Endorse Here.” This is where you should sign the check. Whether it’s a physical or mobile check, make sure that the signature and all additional details stay within the area.
Confirm guidelines: Some banks and financial institutions have their own guidelines for endorsing a business or personal check. You may want to check your bank’s guidelines to ensure that you don’t make a mistake.
What Does It Mean to Endorse a Check?
Endorsing a check simply means that you – the payee – agree to accept the money being paid to your account with the said check. It involves signing the back of the check. That signature is called an endorsement.
Types Of Check Endorsements
There are three types of check endorsements. Each type determines how the check can be deposited. Here’s a summary of each:
This refers to when you sign on the back of a check without providing additional restrictions. As such, anyone who gets their hands on the check can deposit it. This holds true even if their name doesn’t appear in the payee section.
This lack of restriction creates a security concern because if you lose the check, someone else can deposit it in their account. For this reason, only sign a blank endorsement when you’re ready to deposit the check. Preferably do it while inside the bank and try as much as possible to avoid a blank endorsement on a check that you’re planning to mail or deposit at an ATM.
Contrary to a blank endorsement which can be deposited into any account, a restrictive endorsement ensures that the check is only deposited in a specific account. To use this type of endorsement, add your signature and a description like “for deposit only to account of payee” or “for deposit only to account ##,” where ## refers to a particular account number.
A special endorsement allows you – the payee – to make a check payable to a third party. In which case, your name will appear on the front of the check as the payee. However, on the back of the check, you will indicate “pay to the order of ##,” where ## refers to the account details of the person receiving the money.
It’s important to note that some banks don’t allow special endorsements because they are prone to fraud and forgery.
Who Endorses a Check?
Oftentimes it is the payee who endorses a check. The payor has already signed on the front, leaving the payee to sign on the back.
However, things may vary slightly depending on who the check is addressed to. For example, if it’s addressed to multiple parties, say Mr. A and Mrs. B, then both of them have to endorse the check. On the other hand, if the check is addressed as Mr. A or Mrs. B, then either of them may endorse it.
If you’re a business owner with a separate business checking account (from your personal account), then business checks will be addressed to the business and not to you personally. In that case, either you – the proprietor – or an authorized figure in the business can endorse the check.
In case the check is payable to one party but for the benefit of (FBO) another party, then the first payee is the one to endorse it. For example, if person A makes out a check to person B for the benefit of person C, then person B will be the one to endorse it. Person C won’t need to.
Endorsing a Check for Mobile Deposit
The process of endorsing a check via a mobile device is slightly different from that of endorsing a physical check. For starters, most banks have their own requirements for mobile deposit endorsements. Be sure to read them before you proceed to endorse a check for mobile deposit.
Besides that, it’s important to include the description “for mobile deposit only.” Although this is not a rule that’s written in stone, most banks require you to do it anyway.
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