Best Practices for Business Cheque Management: A Complete Handbook

Table of Contents

Introduction to Business Cheque Management

Effective cheque management is essential for maintaining financial control, preventing fraud, and ensuring smooth business operations. This comprehensive handbook covers all aspects of managing cheques in a business environment.

Cheque Book Security

Physical Security Measures

Storage Requirements:1. Locked cabinet or safe 2. Limited access keys/combinations 3. Fireproof storage for active cheque books 4. Separate storage from signature stamps

Inventory Control:- Log all cheque books received - Record serial number ranges - Track distribution to authorized personnel - Regular inventory audits

Access Controls

Role	Access Level	Responsibilities
Finance Director	Full access	Oversight and approval
Accounts Payable Manager	Controlled access	Daily operations
Authorized Signatories	Signing only	No blank cheque access
Clerical Staff	No access	No direct handling

Cheque Issuance Procedures

Before Writing a Cheque

Verification Checklist:- [ ] Payment request approved - [ ] Invoice verified against PO - [ ] Vendor details confirmed - [ ] Budget availability checked - [ ] Duplicate payment check completed

Writing the Cheque

Essential Elements:1. **Date:** Current date (avoid post-dating unless necessary) 2. **Payee:** Full legal name of recipient 3. **Amount in Figures:** Clear, starting at left edge 4. **Amount in Words:** Complete, with "only" at end 5. **Crossing:** Account Payee Only recommended 6. **Signature:** Authorized signatory(s)

Best Practices:- Use permanent, gel-based ink - Fill all spaces completely - Draw lines through unused spaces - Never sign blank cheques - Double-check all details before signing

Cheque Register Template

Date	Cheque #	Payee	Description	Amount	Signed By	Cleared Date

Approval Workflows

Amount-Based Authorization

Amount Range	Approval Required
Up to $1,000	Department Manager
$1,001 - $10,000	Finance Manager
$10,001 - $50,000	Finance Director
Over $50,000	CEO + Finance Director

Dual Signature Requirements

For enhanced control, implement dual signatures: - All cheques over a threshold amount - Cheques to new vendors - Non-standard payment requests - Related party transactions

Reconciliation Procedures

Daily Tasks

1List all cheques issued
2 - Record in cheque register
3 - Update accounting system
4 - File supporting documents

2. Review cleared cheques - Compare with bank notifications - Update register with clearing dates - Investigate delays

Weekly Tasks

1Outstanding cheque review
2 - List uncashed cheques over 1 week old
3 - Contact payees for old cheques
4 - Consider stop payment for ancient cheques

2. Bank statement preview - Review online banking activity - Flag unusual items - Prepare for monthly reconciliation

Monthly Reconciliation

Step-by-Step Process:

1Obtain bank statement
2Compare with cheque register
3Identify outstanding cheques
4Note cleared cheques
5Investigate discrepancies
6Prepare reconciliation report
7Management review and sign-off

Voided Cheques

When to Void

Errors in writing
Damaged cheques
Cancelled payments
Stale-dated returns

Void Procedure

1Write "VOID" across cheque face in large letters
2Cut through signature line
3Record in cheque register
4Retain voided cheque in sequence
5Document reason for voiding

Tracking Voided Cheques

Cheque #	Void Date	Reason	Authorized By	Retained

Fraud Prevention

Internal Controls

Segregation of Duties:- Cheque preparer ≠ Cheque signer - Reconciler ≠ Cheque issuer - Approval authority ≠ Payment processing

Verification Steps:- Verify new vendor information - Confirm changes to vendor bank details - Review large or unusual payments - Audit trail for all approvals

External Threats

Protection Measures:- Use high-security cheque stock - Implement Positive Pay with your bank - Secure mail handling for cheques - Monitor for fraudulent encashments

Record Retention

Retention Requirements

Document Type	Retention Period
Issued cheques (images)	7 years
Cheque registers	7 years
Bank statements	7 years
Reconciliation reports	7 years
Voided cheques	7 years
Supporting documentation	7 years

Storage Methods

Physical Storage:- Organize by year and month - Label clearly - Store securely - Protect from environmental damage

Digital Storage:- Scan all cheques and documents - Use consistent naming conventions - Implement backup procedures - Ensure searchability

Audit Procedures

Internal Audit Checklist

Cheque Security:- [ ] Cheque books stored securely - [ ] Access limited to authorized personnel - [ ] Inventory accurate and current - [ ] Voided cheques properly handled

Issuance Process:- [ ] Proper approvals documented - [ ] Segregation of duties maintained - [ ] Register accurately maintained - [ ] Supporting documents filed

Reconciliation:- [ ] Monthly reconciliation completed - [ ] Discrepancies investigated - [ ] Management review documented - [ ] Outstanding cheques followed up

Preparing for External Audit

1Organize all cheque records
2Prepare reconciliation summaries
3Document control procedures
4Have voided cheques available
5Ready supporting documentation

Technology Solutions

Cheque Management Software

Features to Look For:- Cheque printing capability - Register automation - Positive Pay integration - Reporting and analytics - Audit trail functionality

Integration Points

Accounting software
Banking platforms
Document management
Approval workflow systems

Conclusion

Effective cheque management requires attention to security, proper procedures, regular reconciliation, and appropriate technology support. By implementing these best practices, businesses can minimize fraud risk, maintain accurate records, and ensure efficient payment operations.

Quick Reference

1Secure all cheque stock
2Implement proper approval workflows
3Maintain accurate registers
4Reconcile monthly without fail
5Retain records for required periods
6Audit procedures regularly