Although in the modern world banking operations are the most common, some financial instruments remain in force given their practical usefulness in a great variety of cases within commercial relationships. This is what happens with checks, of which we find different types.
Today we will analyze what is a certified or conformed check, what are its characteristics, advantages and disadvantages.
What is a certified check?
It is defined in this way to any payment order whose funds are certified by the banking institution. That is, it is a common check, but with the difference that the bank certifies that the issuing account has sufficient funds to pay it at the time of issuing it.
In this case, the financial institution assumes certain responsibilities to the beneficiary and guarantees that the money is available in the account for collection, usually within a specified period of time.
The institution is responsible for the existence of the funds at the time of issuance and until a deadline, but does not assume responsibility for the effectiveness of the payment, something that must be very clear when we accept this type of document.
What are the characteristics of this document?
In general, and being a common check, it must include the name of the issuing bank, the amount of the draft, the name of the person or company to whom the check is addressed and the signature of the person responsible for the financial institution. In addition, the stamp and signature of the bank is included, which gives rise to the legal certification of the funds at the time of issuance.
From that moment, the bank is responsible for the existence of the amount until the deadline for submission expires, at which time the bank is exonerated from any legal or criminal responsibility to cancel the amount owed on the document.
In other words, it is a document with an expiration date. In Spain, certified checks must be cashed within a maximum period of 15 days after its issuance and if it was carried out abroad, but within Europe, the term is 20 days And till 60 days if it was conformed outside the European Union.
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Advantages and disadvantages of the certified check payment instrument
The main advantage of this document is the certification that the issuer really has enough money to cover the payment, making its collection feasible. Thus, it becomes possible to carry out operations where significant amounts of money are mobilized, generating a relationship of trust between both parties.
As a disadvantage, we have the fact that the check has an expiration date, therefore there is no responsibility on the part of the bank, if the beneficiary does not execute the collection action within the period established by law, regardless of the cause of this or the inconveniences that are generated as a result of it.