Image courtesy of The Association of Banks in Singapore
Reasons for Dishonoured Cheques
Whenever a cheque given to a business bounces, the bank will send notice to the business that the customer/ debtor’s cheque was dishonoured. The cheque may not have been cleared for one or more of the following reasons:
1. There is insufficient funds in the payer’s bank account.
2. The cheque was not written in the form that it was supposed to
a. Differing/missing signature(s). It is not uncommon for companies to have more than one signatories.
b. Amount in words and numbers don’t tally,
c. “or bearer” was strike off for a cash cheque,
d. Too many corrections made on the cheque.
3. The cheque was post dated.
Image Return Document (IRD), Return Cheque Advice or Refer to Drawer
This notice comes in the form of an Image Return Document (IRD) which contains a scanned image of the dishonoured cheque. The IRD can be re-presented to the bank to receive payment subject to some of these conditions:
Conditions for IRD Presentment, if applicable
1. IRD with any alteration, mutilation or tear will not be accepted
2. To be presented at any of the bank’s branches in Singapore.
3. The IRD will be retained when presented to the bank.
4 To be presented on a clearing day not later that 6 mmonths from the cheque date,
For those taking the GCE O’/N’ Level Principles of Accounts, the IRD is mentioned in the textbooks as notice of dishonoured cheques in the chapters on Cash Book and Bank Reconciliation. The following words/ phrases refer to the IRD:
– Return Cheque Advice
– Refer to Drawer
– Returned by bank marked “insufficient funds”
– Cheque given by xxx (name of debtor) was dishonoured.
Download a sample a real-life Return Cheque Advice in pdf here.
The Association of Banks in Singapore (ABS) represents and promote the interests of member banks as well as help set standards of good practice and raise the banking industry expertise in Singapore. The pdf version of the Cheque Return advice first appear in ABS’ website and is reproduced here with permission.