A business man, in order to give himself every chance, will pay all cheques to the credit of his banking account upon the day he receives them from his customers. He has, in the legal sense, until the close of the first business-day following the day he gets the cheque, when, if he like, he can post it to his agent, who has the same time-allowance for presentment, provided the cheque be not drawn upon a bank in his own town. If he delay longer any loss incurred by the drawer through non-presentation will fall upon the payee’s shoulders. For instance, should the bank fail, the payee might be saddled with a bad debt through his delay.
A customer who has a doubtful cheque in his possession, and who is anxious to know whether the drawer has funds to meet it, can instruct his banker to forward the cheque in question direct to the drawer’s bankers, with the request that they telegraph back whether or not the cheque is paid. Or he may ask them to wire only in case of non-payment, and so save himself the expense of a telegram. Some companies, when they think a customer will stand it, charge 1s. for doing this; but one should decline to pay more than the price of the telegram, viz., 6d.
Returned and Dishonoured Cheques.
It does not follow that, because a banker returns a cheque, the money is not there to meet it, as, more often than not, a cheque is sent back for some irregularity in the indorsement, which can be at once put right. It is necessary, therefore, before jumping to conclusions, to carefully examine the words written upon the document. The following are the usual answers given by bankers, with their abbreviations:
“R/D” (refer to drawer). Such an answer clearly implies that the cheque has been dishonoured for lack of funds.
“Effects not cleared.” Here the client, assumably, has enough money to meet the cheque, but the banker has not yet cleared or realized the documents he has paid in, and the drawer’s credit is so poor that he will not honour his cheque until this has been done. A cheque thus marked is usually re-presented, but, obviously, the drawer is weak.
“N/S” (not sufficient). We gather from this that the drawer has some money standing to his credit, though not enough to meet the cheque.
“Words and figures differ” does not require an explanation, though, perhaps, it may be remembered that weak drawers have a trick of making mistakes in order to gain time. “Payment stopped,” “Post-dated,” “Incomplete,” “Another signature required,” “Indorsement irregular,” and other answers that might be given, are self-explanatory. Cheques returned for these reasons naturally do not reflect any discredit upon the drawers. Of course, a person with an open, charitable mind is free to make his own deductions.
Occasionally a banker returns a customer’s cheque when he is in funds. Such a mistake generally occurs through a credit having been posted to the wrong account, and as often as not the two customers are blessed with the same surname, though not with an equal amount of this world’s goods. Brown, for instance, is not an uncommon name, so we will assume that a credit of poor Brown’s has been posted to rich Brown’s account by mistake, and that the banker returns the former’s cheque for £50 marked “refer to drawer.” Now poor Mr. Brown has a good case against his banker, and should at once consult his solicitor, who will see that he gets compensation for the damage done to his credit. Most bank-directors, who are modest, retiring gentlemen, prefer to settle such a case privately, as it is not thought desirable to advertise the fact that a mistake of this nature, with their perfect system of book-keeping, is possible.