Business cheques are still used by many Canadian companies, even as digital payment methods become more common. If you’re paid by a business, need to process payroll, or accept payment for services, knowing how to read and handle a business cheque is an essential skill.
At Remitly, we make financial processes simple and secure, especially for international and cross-border transactions. This guide will help you understand Canadian business cheques, verify their authenticity, and manage them with confidence.
Tip: In Canada, Interac e-Transfer is a popular alternative to cheques for fast, secure payments between individuals and businesses. However, business cheques remain valuable for record-keeping, payroll, and certain vendor payments.
Understanding the Purpose of Business Cheques
A business cheque is issued by a company, not an individual, and is widely used to pay suppliers, employees, and service providers in Canada. Business cheques usually display the company name, logo, address, and often have additional security features to prevent fraud.
Having a paper trail is important for many Canadian organizations, as it helps with accounting and record-keeping. Newcomers to Canada often receive their first business cheque when starting a job, getting a refund, or working with a Canadian business. In some cases, a business cheque is the best option – for example, when electronic payments aren’t suitable for the amount or type of transaction.
The Importance of Reading Cheques Accurately
Reading a cheque incorrectly can lead to delays in deposits, bank errors, or even fraud. Understanding each part of a business cheque protects you from mistakes and scams. By reading cheques accurately, you can:
- Make sure your records are correct
- Spot possible fraud
- Meet bank requirements and avoid rejected deposits
- Track your income and watch for suspicious activity
Now, let’s look at the details of a Canadian business cheque.
Identifying the Parts of a Business Cheque
Canadian business cheques share several standard components, laid out according to national guidelines set by Payments Canada.
Cheque Number Location
You will find the cheque number in these two spots:
- Top right corner of the cheque, printed clearly
- Far right of the MICR (Magnetic Ink Character Recognition) line at the bottom
Each cheque from an account has a unique number, making it easy for you or the business to track payments. Cheque numbers are usually sequential.
If you receive multiple cheques from a business, check that the cheque numbers make sense; a missing or out-of-order number could be a sign of an issue.
Find the Transit Number, Institution Number, and Account Number
The bottom of your Canadian cheque features the MICR line – a sequence of numbers crucial for processing:
- Cheque Number: Matches the number at the top right.
- Transit (Branch) Number (5 digits): Identifies the branch where the account is held. For example, a TD branch in Toronto might use “12345”.
- Institution Number (3 digits): Identifies the bank or credit union. Some examples:
- RBC (Royal Bank of Canada): 003
- TD Canada Trust: 004
- Scotiabank: 002
- Account Number: The specific account funds will be drawn from. The length varies by bank.
Payments Canada maintains a full list of Canadian institution numbers and branch codes on their website. These numbers route your deposit to the right branch and account.
Other Key Elements: Date Line, Memo Line, and Signature Line
In addition to the numbers, Canadian business cheques include:
- Date line: Top right corner; date is usually in year/month/day or day/month/year format. Cheques older than six months (stale-dated) may not be honoured by Canadian banks.
- Payee line: “Pay to the Order of” indicates who can deposit the cheque; your name or business name should be here.
- Amount Box: Dollar amount, written as numbers (e.g., $2,000.00).
- Amount Line: Dollar amount in words (e.g., “Two thousand and 00/100”). If the numbers and words differ, Canadian banks will use the written words.
- Memo Line: Bottom left corner provides the purpose or invoice number. Optional, but helpful for record-keeping.
- Signature Line: Bottom right. A company officer or approved signing authority must sign; larger businesses may require two signatures.
Note: Canadian business cheques are often bilingual (English and French), which is standard for many major banks and national organizations.
How to Tell What Bank a Cheque Is From
Knowing the issuing bank helps you verify a cheque’s authenticity.
Understanding Financial Institution Information
You’ll usually see the bank’s name and logo near the top left. Examples include RBC, TD, Scotiabank, BMO, or CIBC. Many cheques show the bank’s address or branch as well.
Look for security features like watermarks or microprinting – common on Canadian cheques to help prevent fraud.
Using Institution Numbers to Identify Banks
The institution number on the MICR line shows which bank issued the cheque. To confirm the bank, visit the Payments Canada website for a full list:
- RBC: 003
- TD: 004
- Scotiabank: 002
- BMO: 001
- CIBC: 010
The Canadian Bankers Association is also a helpful resource for banking information and financial safety tips.
Ensuring Cheque Accuracy and Validity
Fraudulent cheques can result in lost funds or legal trouble. These steps can help you verify a Canadian business cheque:
- Check paper quality and security features: Authentic Canadian cheques are printed on sturdy paper with features like watermarks, microprinting, or holograms.
- Look for perforated edges: Most cheques are torn from a chequebook, leaving a rough or perforated edge.
- Examine the MICR line: The numbers should be in magnetic ink, which feels slightly raised.
- Double-check the bank and business information: The institution number, transit number, and printed bank name should match. Confirm details with Payments Canada or the bank’s official website.
- Contact the business or bank: If you have concerns, use contact details found independently (not from the cheque) to verify payment.
Warning Signs of Fraud
- Differences between the printed bank name and the institution number
- Missing or poor-quality security features
- A cheque number far outside the normal sequence, especially from an established company
- Unusual requests to deposit and return funds quickly – this is a common scam in Canada
- Blurry logos or uneven printing
If you suspect a cheque is fraudulent, contact your bank or report it to the Canadian Anti-Fraud Centre before depositing.
Handling Business Cheques Effectively
Once verified, handle and deposit your cheque safely.
How to Endorse and Accept a Business Cheque
The Canadian standard is to endorse only when you’re ready to deposit, protecting you if it’s lost or stolen. Here’s how:
- Flip the cheque over to the endorsement line.
- Sign your name or business name as shown on the front.
- Write “For Deposit Only” with your account number for added security.
- Mobile deposit notes: Many Canadian banks require you to write “For Mobile Deposit Only at [Bank Name]” if using a mobile banking app. Check your bank’s guidelines.
Cheque Deposit Options in Canada
You can deposit business cheques in a few ways:
- In-branch: Visit your bank (e.g., RBC, TD, Scotiabank); bring government-issued ID if cashing the cheque in person.
- ATM deposit: Most bank ATMs accept cheques for deposit.
- Mobile deposit: Nearly all major Canadian banks offer this feature. Just take photos of the cheque through your bank’s app.
- Interac e-Transfer: For future payments, consider Interac e-Transfer – it’s fast, secure, and widely used by businesses in Canada as an alternative to writing cheques.
If you’re new to Canada, mobile banking and Interac e-Transfer provide safe, simple ways to receive payments.
FAQs
What do I write on the back of a business cheque?
Endorse with:
- Business name (if applicable)
- Your signature
- “For Deposit Only” and account number
If mobile depositing with a Canadian bank, include any specific wording required by your financial institution.
Can I deposit a business cheque made out to my company into my personal account?
Canadian banks require cheques made out to a business be deposited into a business account of the same name. Sole proprietors may have exceptions, but always check with your bank.
How do I check if a business cheque has cleared?
Use your bank’s online portal or app. Some banks place a hold on large or unfamiliar cheques. Funds can be reversed if the cheque is fraudulent. Contact your bank for confirmation, and don’t spend the funds until the cheque is officially cleared.
Can I cash a business cheque at any bank in Canada?
You’ll usually need to visit a branch of the issuing bank (match the institution and transit number), with government-issued photo ID. Your own bank is the safest place to deposit or cash a cheque. Cheque-cashing stores are available nationwide but charge higher fees.
Where can I verify a Canadian bank or institution number?
Visit Payments Canada for institution and transit numbers. The Canadian Bankers Association offers education and fraud prevention tips at cba.ca.
By understanding how Canadian business cheques work and following safe handling practices, you can process payments securely and with peace of mind. If you have questions, reach out to your bank or trusted financial resources in Canada.