NFIB

Avoid Errors and Fraud When Writing Checks
04/ 11/ 2002

You write a check to a vendor and put it in the mail. No problem, you do it almost every day. But one time something goes wrong. The person you wrote and mailed the check to calls several weeks later and says the check hasn't arrived, even though plenty of time has passed for the delivery. The first thing to do in this instance is call your bank and see if the check has been cashed. If it hasn't, put a stop payment on the check and write another. But what if the check has been cashed, even though the payee insists that it hasn't even arrived? Or what if the check has been cashed for a larger amount than you wrote it for?

Check problems can be aggravating and time consuming. In today's Workshop, Jeffrey Moses offers points to help you avoid this situation.

1. If your company writes a lot of checks, consider purchasing equipment or software that generates checks by computer or with check-protector equipment. A check protector imprints the payee and the amount in numbers and words on the checks, making the check extremely difficult to alter. Most office-supply stores offer a variety of such products, which are a relatively inexpensive way to purchase peace of mind.

2. Many small businesses write checks by hand. If this is your method, always enter the payee's name as far to the left as possible on the check, then draw a line that fills in the rest of the area. This helps prevent someone from inserting another name.

3. Write the check amount as close to the dollar sign as possible to prevent someone from inserting an additional number.

4. When writing the check amount in words, start at the far left of the space allotted for the purpose. Capitalize only the first letter. Hyphenate all numbers from twenty-one to ninety-nine. Use the word "and" between the dollar and the cent amount. Then draw a line all the way to the right of the space. When writing a check for less than a dollar, write the word "only" before the amount, then write the amount in words. Cross out the word "dollars" that is on the check. Also, when writing a check for less than a dollar, circle the amount that is to the right of the dollar sign.

5. Make sure that the dollar amounts agree in both fields of the check: in the space where you write the numbers only, and in the space where you write the words and numbers. If there is a discrepancy, most banks will favor the amount written over the words.

6. When writing a check to an individual who is an official at a company, always include the person's title or the name of the company so the person can't deposit the check into his or her own account.

7. If you make a mistake when writing a check, do not correct it. Write "void" on the check and either file it or destroy it. Be sure to write "void" in your check register to help your accounting records.

8. Never write a check in pencil. Always use indelible blue or black ink. Avoid using colored inks for business purposes.

For additional information about avoiding check fraud, please see the former Workshop, "Avoiding Check Fraud on Your Company Account."

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