BANKER’S ADVICE.

Hauraki Plains Gazette, Volume XXXVII, Issue 5070, 31 December 1926, Page 4

BANKER’S ADVICE.

DEALING WITH CHEQUES. PRECAUTIONS AND RISKS. ■ “The safest way of issuing a cheque is to make it payable to order and mark it ‘not negotiable.” This Was the advice given by a Christchurch banker when discussing commercial procedure. In view of recent comments on the risks attached to the handling of cheques in the course o’f trading, information as. to the cashing of cheques was sought from the banker. “The. system - pf paying by cheques is most convenient and is practically necessary throughout New Zealand,” he said. “It is more universally used in New Zealand and Australia than in the Old Country, and, of course, it carries a certain amount o'f risk. The protection for order cheques is the law, but the banks exercise all reasonable precautions before they cash an endorsed cheque. The safest way is to make the. cheque payable to order and cross it with, the words ‘not negotiable/ There are very-many order cheques issued, for instance, by the dairy companies. If these were not, negotiable the people who received thqm would have to take the cheques to a merchant to get them cashed, which meant that they would have, to buy something. Our experience is that there are wonderfully few forged endorsements. The banks endeavour to put the public to as little, inconvenience as possible, and to do that they are not ,as stiff as they might be. They are sometimes prepared to take commercial risk, as distinct from a legal risk. You will find that the majority of cheques are made payable to order.”

With regard to thei case of a person who wished to pay an account with a cheque marked "not negotiable,” the banker .stated that it should be made clear to whom the was transferred by adding to the endorsement the words "Pay to ” (name of firm or person). In this case the bank could then accept the cheque.