10 best practices to follow before writing a cheque

financialexpress.com:

Signing a cheque? It is important to be cautious before doing it due to the legal and financial implications involved. A signature on a cheque signifies authorisation for the mentioned payment, making it a powerful financial instrument.

You must know the recipient and the purpose before signing a cheque. A signed cheque can be misused or filled in for unintended transactions, causing financial losses and disputes. These small tips can reduce the risk of falling victim to fraud or legal troubles.

Adhil Shetty, CEO, Bankbazaar.com says, “By signing a cheque, you become legally obligated to honour the payment. Any discrepancies or lack of funds can lead to bounced cheques, causing damage to your credit score, and legal consequences.”

Here are some reasons why you must exercise caution:

It is very critical to ensure that you have sufficient funds in your account to cover the amount of the cheque. Maintaining sufficient funds before issuing a cheque in India is of paramount importance to uphold financial credibility and avoid legal consequences.

When a person issues a cheque without adequate funds in their bank account, it results in a bounced or dishonoured cheque. Such a situation can lead to legal repercussions.

Also Read: How to save for your child’s education? Here are 5 tips for parents

Make sure that the date on the cheque is correct and matches the day you are issuing it. It is essential for various reasons. Firstly, it ensures clarity and avoids confusion about when the cheque becomes valid for encashment. Incorrect dates might lead to delays or rejection by the recipient’s bank. Secondly, a proper date is crucial for maintaining accurate financial records and reconciliation of transactions.

Lastly, adhering to