Why We Advise Against The Use Of Cheques As Payment For Our Services? - London Registrars

One of the recent debates among ourselves here at London Registrars concerned the tendency of some firms solicitors to still send us cheques in payment of invoices. While these cheques are usually for less than £200, we advise against clients of our services depending on us always accepting cheques as payment.

The reasons for this are several: Firstly, our nearest bank branch has been closed since before the lockdown, and the next branch – over half an hour away in the City – has not reopened yet following the easing of restrictions. To bank a cheque is a costly exercise for us as it takes one of our employees the best part of an hour-and-a-half to bank a cheque.

There is also, however, the very little-known issue of the law surrounding cheques – as detailed below.

Cheques are not legal tender

To understand our policy against the use of cheques as payment where at all possible, it is instructive to look back at how they have always been defined.

Ever since cheques were first introduced, they have not been a promise to pay by the bank, but instead a request to the bank that it pays a certain amount to a third party, out of the funds the customer deposits. The Bills of Exchange Act 1882, for instance, defines a cheque as a written order from an account holder, instructing that their bank pays – on demand – a specified sum of money to one or more named beneficiaries.

As a consequence, a bank will only honour a cheque if the account holder has enough funds to meet it, or if it can be covered by a line of credit such as an agreed overdraft.

At no point in their history have cheques ever been legal tender. This means that if you owe money to someone, they are not obliged to accept a cheque. A creditor has the right to be paid in legal tender, and can refuse any other form of payment.

Contact the London Registrars team about our governance and compliance support

With our company secretarial solutions encompassing such services as directors’ service addresses, the preparation and submission of the annual Confirmation Statement, and register of shareholders maintenance , we are pleased to cater to a wide range of requirements in relation to corporate governance, risk and compliance.

Please enquire to us today for further information about any of our areas of know-how and experience, either by phone or email to info@london-registrars.co.uk.

Visit Us For A Specialist Wig Fitting – Hairware

lizseyi

Hairware consultants aim to provide a private, personal and individual appointment and make you feel as comfortable as possible. Our appointments are carried...