Guidelines for Cashing Business Checks

Many small businesses--especially retailers--empower consumers by accepting several different forms of payment for products or services. Some retailers allow customers to cash a business check, typically a payroll check, and either charge a nominal fee for the service or cash the check for free if the customer's bill exceeds a certain amount. Although cashing a business check may improve customer loyalty and satisfaction, business owners should think carefully about the risks and rewards, and then set appropriate acceptance policies.

Policy Standards

Establish clear rules about what kinds of checks can be accepted. In general, companies do not accept post-dated checks, checks more than 90 days old or checks worth more than $10,000. The $10,000 limit relates to federal money-laundering laws; any transaction involving $10,000 in cash requires a currency transaction report to be filed with the Internal Revenue Service.

Train your clerks to inspect business checks to verify that each check has a date, a payee name, a dollar amount with figures and matching text, a signature, the payer's name and account numbers along the bottom edge of the check. Instruct them to make your customer sign the back of the check in the clerk's presence.

If your business charges a service fee for cashing a business check, post this information in a conspicuous place to avoid confusion.

Check Approvals

Retailers generally have no way of knowing whether a business check is valid, so consider subscribing to a clearinghouse service, such as Telecheck, for instant approvals on business checks. Also, provide clerks with guidelines for how large of a check, and how many checks, they can cash for a given customer before getting management approval.

Customer Identification

As with personal checks, clerks must verify the identify of their customers and ensure that the ID presented matches the name and address printed on the business check. Instruct employees that they must record the ID number and expiration date of every valid drivers' license or state-issued ID card on the back of the check and verify the endorsement signature against the ID.

Fraud and Recovery

Publicly post your policies about bad checks. Many vendors charge a fixed fee for each bounced check, often $15 to $30 per occurrence, and tie responsibility to the customer and not to the company issuing the check. Be sure that a written check-acceptance policy informs the customer that she is liable if the check should bounce for any reason.

Monitor bulletins from the Federal Trade Commission (FTC) about various organized fraud rings operating in your area and monitor FTC alerts for signs of potential fraud among customers.


Train your clerks how to spot common endorsement problems. These challenges include third-party checks (checks that are made payable to one person, who signs the back and writes, "pay to the order of" someone else) and checks that require multiple signatures. For example, a check made payable to a husband and wife must be signed by both parties.

Do not allow clerks to accept checks with restrictive endorsements. For example, some people will write "without recourse" on a check, which means that the company cashing the check agrees that if there's a problem with the check, then the company cannot pursue damages from the person who presented it.