7 Rules for Correctly Endorsing Checks—and Why It’s So Important.

Paper checks are used less and less often nowadays, so a little refresher course in check endorsement is wise. An improperly endorsed check could make your business vulnerable to fraudulent activity. At the very least, it could delay your funds.

So, how do you best dot all your i’s and cross all your t’s? Easy enough. We’ve compiled the top 7 things you need to know. Read on, and rest assured.

1. A check must be endorsed on the back for it to be valid for deposit. So, always sign your name in the blank space next to the X just before you bring it to the Bank. Note: You can deposit at a Bank location, through our mobile app, or at an ATM.

2. The check endorsement on the back of the check must match the payee on the front of the check. So, check your check to make sure!

3. Adding a statement that reads “For Deposit Only in Account Number 0000000000 at the Farmers and Merchants Bank” under your signature ensures that the check cannot be cashed or deposited in another account.

4. Adding a statement that reads “Pay to the order of Joe Doe” under your own signature transfers the ownership of that check to Joe Doe. To negotiate that check, Joe Doe would also have to endorse the check underneath your signature in order to receive the value of the check. The downside of two party checks is that they’re more difficult to negotiate.

5. If a check has multiple payees, and the word “or” does not appear, all payees must endorse the check. As an example, a check made payable to you and your Bank must be endorsed by both.

6. If the payee of a check you have written fails to endorse a deposited check, that check may be returned to you. By returning an unendorsed check, the Bank is protecting you against the negotiation of a stolen check.

7. When you’ve paid by check, it’s important to review the endorsements on the checks in your bank statement to ensure the checks were negotiated by the party you intended to pay. An endorsed check is a receipt. If the check in your statement is not endorsed by the payee, you do not have a valid receipt.

Proper check endorsement is one smart way to protect your business. We’re here if you have any questions!