1. Handling Checks
Module 2

2. WEEK TWO OUTLINE Check Components Negotiability Requirements
Acceptability
Types of Checks
Exercise 2-1 Negotiating Checks – Refer to your textbook

3. Objectives identify the different components of a check
determine if a check is negotiable and acceptable

4. SECTION 1: COMPONENTS OF A CHECK
Develop the habit of looking at each check in a clockwise order to review the check components. Review to Exhibit 2-1 on page 10 in your textbook.
1. Look at the date
2. Compare the dollar amounts
3. Verify the drawer’s signature
4. Check the MICR encoding
5. Look at the drawee bank information

5. SECTION 2: NEGOTIABILITY
Negotiable Item – a document that can be transferred from one party to another by the endorsement or delivery of the document.

6. A check or other draft must have the following to be negotiable
The item must be written
Must be signed by the drawer of the check
Look for words of negotiability such as, “Pay to the order of” or “Pay to.”
There must be a specific dollar amount of the check
The item must be negotiable for money
A date must be required
The item must be payable to a payee or bearer

7. ACCEPTABILITY
Section 3

8. Criteria for Check Acceptance
1. The check must not be postdated or staledated
2. Drawer’s signature matches signature card
3. No alterations
4. Sufficient funds
5. No stop payment orders
6. Your bank’s customer, or drawn on your bank

9. Section 4 - Types of Checks
Personal Checks
Interests Bearing Account Checks
Business Checks
Blank Checks or Counter Checks
Traveler’s Checks
Substitute Checks

10. Drafts Drafts are easily confused with checks. Types of Drafts
Insurance Draft – made payable to one or more parties and are issued by insurance companies.
Convenience Checks – used to transfer balances from one credit card company to another or for any other purpose.