D-2-1- The bank check's advantages and drawbacks

2-1-1- The check

The check is a paper-based payment tool. This tool allows the account holder, the drawer, to make a payment via the bank, the drawee, to the exporter. The amount of the invoice is indicated on the check.

Checks are processed using a computer. In effect, they are dematerialized upon receipt by the bank. This is not the case for all countries, which consequently creates problems with receivables management.

All countries are not subject to homogeneous laws, thus this payment tool offers the exporter minimal protection. Some international instruments, such as the Geneva Convention of 1931, require a legal framework for this type of payment. One of its foundations is to apply the law of the land where the check is to be paid, in cases of dispute.

Since there is a corporate check (business check), there is also a bank check. These two types of checks are generally accepted in most countries.

2-1-2- The bank check: definition

As drawer of the bank check, it is the bank that debits the customer's account. The bank issuing the check is covered immediately by the fact that it collects directly from the client account.

2-1-3- The bank check : collection mode

There are two types of collection: "under reserve" and credit after collection.
  • Collection "under reserve": the exporter is credited when the check is presented.
  • Credit after collection: the exporter is credited only after payment collection from the exporter's bank

2-1-4- The bank check: advantages

There are more advantages with the bank check than with the business check within the scope of international transactions:
  • The bank check is simple to use.,
  • It provides, to a lesser extent, legal recourse in case of default.,
  • It is inexpensive for the drawer,
  • The bank takes less risks.

2-1-5- The bank check: drawbacks

  • One drawback is the extended payment period,
  • the time that is needed for the collection,
  • Laws vary from one country to another,
  • It does not proetct very well in case of default.