Accepting a bankers draft
Discussion
My company is owed some money by another business. We used to do business together but they bumped me for money a few times and are generally not nice people to deal with.
I have some of their equipment in my possession which I would like returned to them but obviously I want my money to clear beforehand. They are pushing to give me a cheque on collection which I have obviously declined while I have asked for cash or CHAPS which they wont accept. We're at a bit of a stalemate but they are now saying they will offer me a bankers draft.
Ive spoken to my bank who are saying it's completely safe but I really dont trust this company.
I wont be able to see it being written out as its coming from a company in Ireland and neither will I be able to cash it until the next day.
For anyone who is genuinely in the know how safe is this exactly?
Seeing as they are a business I cant see it being forged as that is pure fraud but how easily can these be stopped and are there any ways in which I can make this safer for myself?
There more I google the less confident I am but I may well be reading a load of rubbish!
Its only a few £k if that makes a difference
Thanks
I have some of their equipment in my possession which I would like returned to them but obviously I want my money to clear beforehand. They are pushing to give me a cheque on collection which I have obviously declined while I have asked for cash or CHAPS which they wont accept. We're at a bit of a stalemate but they are now saying they will offer me a bankers draft.
Ive spoken to my bank who are saying it's completely safe but I really dont trust this company.
I wont be able to see it being written out as its coming from a company in Ireland and neither will I be able to cash it until the next day.
For anyone who is genuinely in the know how safe is this exactly?
Seeing as they are a business I cant see it being forged as that is pure fraud but how easily can these be stopped and are there any ways in which I can make this safer for myself?
There more I google the less confident I am but I may well be reading a load of rubbish!
Its only a few £k if that makes a difference
Thanks
I accepted a banker's draft for when I privately sold my last car, and paid for my next car with one too. Both for >£20k.
The money is taken straight from the payer's account and put in a holding account (the guaranteed cleared funds bit) however once you pay the draft into your bank it can take a week to clear like a cheque. The difference is you're waiting for the money to clear from the holding account, not the individuals/business' account so no backsies!
When I paid the draft in as a seller I could see the funds on my balance, however not showing as available balance until it cleared in around a week. As a buyer, as soon as I had the paper draft and walked out of the branch the money was gone from my account.
The money is taken straight from the payer's account and put in a holding account (the guaranteed cleared funds bit) however once you pay the draft into your bank it can take a week to clear like a cheque. The difference is you're waiting for the money to clear from the holding account, not the individuals/business' account so no backsies!
When I paid the draft in as a seller I could see the funds on my balance, however not showing as available balance until it cleared in around a week. As a buyer, as soon as I had the paper draft and walked out of the branch the money was gone from my account.
A banker's draft can look, on casual inspection, like a cheque. And it is processed through the banking system in a similar way to a cheques. But it is not legally a cheque.
A banker's draft is written by the bank itself, on its own head-office account - and is made payable to whoever the customer wants. Unlike a cheque, a genuine banker's draft cannot be stopped - even if it is lost or stolen.
A building society counter cheque is written by the building society on its own local branch account - and is made payable to whoever the customer wants. A building society counter cheque can normally be stopped if it is lost or stolen.
Consumers sometimes treat these two types of payment as being as good as cash, accepting them in payment for higher-value items they are selling (such as second-hand cars) on the assumption that there is no risk of them "bouncing".
Unfortunately, stolen and counterfeit drafts and counter cheques are in circulation - and many of the complaints we see on this topic are from consumers who have accepted a draft or counter cheque which is later returned unpaid because it is fraudulent.
It can be difficult for a consumer easily to spot a fraudulent draft, because some of these fakes are very skilful. In these cases, the consumer may complain that their own bank or building society was at fault for not spotting the problem and warning them when they paid the draft into their account.
In short - if it is a genuine bankers draft then you're safe.
A banker's draft is written by the bank itself, on its own head-office account - and is made payable to whoever the customer wants. Unlike a cheque, a genuine banker's draft cannot be stopped - even if it is lost or stolen.
A building society counter cheque is written by the building society on its own local branch account - and is made payable to whoever the customer wants. A building society counter cheque can normally be stopped if it is lost or stolen.
Consumers sometimes treat these two types of payment as being as good as cash, accepting them in payment for higher-value items they are selling (such as second-hand cars) on the assumption that there is no risk of them "bouncing".
Unfortunately, stolen and counterfeit drafts and counter cheques are in circulation - and many of the complaints we see on this topic are from consumers who have accepted a draft or counter cheque which is later returned unpaid because it is fraudulent.
It can be difficult for a consumer easily to spot a fraudulent draft, because some of these fakes are very skilful. In these cases, the consumer may complain that their own bank or building society was at fault for not spotting the problem and warning them when they paid the draft into their account.
In short - if it is a genuine bankers draft then you're safe.
You have to ask yourself why they wont do chaps - they will have to pay their bank a fee for a draft and visit the bank to buy it - the may just as well pay for and instruct the bank to make a chaps payment - I would be suspicious & would want to check the details of the payment with the issuing bank which can be easier said than done.
A bank draft is absolutely fine. It's essentially a cheque written by the bank on itself and has nothing to do with your payer at all - apart from the fact he has to buy it from the bank in the first place. Your relationship is purely with the bank.
In your situation a draft has the advantage that it can be physically handed over in exchange for physical handover of the equipment you are holding.
If you don't trust such physical handover then what you're really saying is that you want payment BEFORE you'll release the equipment (i.e. by CHAPS) and the equipment owner may not want to trust you for that.
If you're worried, all you need to do is phone the bank and check that the draft is genuine before you formally accept it. You could do that when you actually see it or you could get a scan sent to you in advance and use that scan to do your checking.
In your situation a draft has the advantage that it can be physically handed over in exchange for physical handover of the equipment you are holding.
If you don't trust such physical handover then what you're really saying is that you want payment BEFORE you'll release the equipment (i.e. by CHAPS) and the equipment owner may not want to trust you for that.
If you're worried, all you need to do is phone the bank and check that the draft is genuine before you formally accept it. You could do that when you actually see it or you could get a scan sent to you in advance and use that scan to do your checking.
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