Why do some banks "cash back" corporate checks while others do not?
On our other site, BankersOnline.com, we get lots of queries from bankers asking about this practice. Without fail, we recommend that bankers do not permit the practice because it can be a source for problems.
One major problem is that the board of directors of corporations usually do not authorize anyone to cash checks payable to the corporation. Checks to the corporation are supposed to be deposited to corporate accounts, so that appropriate records of the payments can be made, and to ensure that there are controls in place to protect the owners of the corporation from fraud and embezzlement. Since corporation boards don't specifically authorize individuals to cash checks payable to the corporations, banks that allow cash-back transactions do so at the risk of being sued by the corporation for complicity in theft from the business.
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Why do some banks "cash back" corporate checks while others do not?
On our other site, BankersOnline.com, we get lots of queries from bankers asking about this practice. Without fail, we recommend that bankers do not permit the practice because it can be a source for problems.