Check and promissory note, what are their differences?
Posted: Mon Jan 06, 2025 8:33 am
In the business world, we have several payment documents. We usually don't pay with cash, or even with a credit card, but we tend to use checks and promissory notes. But do we know what the difference is between a check and a promissory note ? If you've been in doubt for even a moment, we recommend that you keep reading. Below we will find out what they are and how they differ.
What is a check?
A check is a payment document issued by a person in favor of a beneficiary. There is the possibility of issuing personal and certified checks . The latter type is guaranteed by a financial institution, while the personal type withdraws the amount from the economy of the person who signs it.
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In order to issue personal checks, our bank must provide us with a checkbook. The checkbook is personalized and is only given to the holders of the account to which the amounts paid by check will be charged.
To make a payment, simply take one of the checks, fill it out and hand it to the bearer.
If the issuer of the cheque does not have malaysia number data sufficient funds, the bank does not make the payment. And it is the beneficiary who must claim this amount from the issuer of the cheque. This means that the bank only acts as an intermediary; if there is no money in the account, there is no payment. Simple.
To avoid this situation, you can use a certified check , through which the bank guarantees payment. To guarantee the transaction, the bank retains the amount necessary to pay the check from the person issuing the check, in addition to the corresponding commission. This retention usually lasts about 15 days and during that time the account holder will not be able to use that amount. Once the retention ends, it will still be possible to cash the check, but the bank no longer commits to the existence of funds in the account.
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What is a promissory note?
A promissory note is also a payment document issued by one person to another. In this way, the obligation to pay the amount of money indicated in the document is contracted, on the date indicated therein.
The promissory note offers the possibility of being guaranteed by a third party. In this case, it will be necessary to specify this in the document.
Differences between a check and a promissory note
Checks and promissory notes are documents used by businesses and individuals to make payments. Through such documents, the person issuing them is authorizing another person to collect a certain amount of money.
Difference 1. Collection date
We see that the objective of both is the same: to settle amounts owed. But the fundamental difference lies in the moment in which the amount indicated in said document can be collected:
Promissory note : it is necessary to specify the date on which the payment can be made.
Check : no date indicated.
What is a check?
A check is a payment document issued by a person in favor of a beneficiary. There is the possibility of issuing personal and certified checks . The latter type is guaranteed by a financial institution, while the personal type withdraws the amount from the economy of the person who signs it.
Create your invoices quickly and easily with Holded. Start for free .
In order to issue personal checks, our bank must provide us with a checkbook. The checkbook is personalized and is only given to the holders of the account to which the amounts paid by check will be charged.
To make a payment, simply take one of the checks, fill it out and hand it to the bearer.
If the issuer of the cheque does not have malaysia number data sufficient funds, the bank does not make the payment. And it is the beneficiary who must claim this amount from the issuer of the cheque. This means that the bank only acts as an intermediary; if there is no money in the account, there is no payment. Simple.
To avoid this situation, you can use a certified check , through which the bank guarantees payment. To guarantee the transaction, the bank retains the amount necessary to pay the check from the person issuing the check, in addition to the corresponding commission. This retention usually lasts about 15 days and during that time the account holder will not be able to use that amount. Once the retention ends, it will still be possible to cash the check, but the bank no longer commits to the existence of funds in the account.
With Holded you don't need to be an accountant to manage your invoices
Create invoices, estimates and proformas in seconds, automatically filling in fields with your stored information.
Start for free
What is a promissory note?
A promissory note is also a payment document issued by one person to another. In this way, the obligation to pay the amount of money indicated in the document is contracted, on the date indicated therein.
The promissory note offers the possibility of being guaranteed by a third party. In this case, it will be necessary to specify this in the document.
Differences between a check and a promissory note
Checks and promissory notes are documents used by businesses and individuals to make payments. Through such documents, the person issuing them is authorizing another person to collect a certain amount of money.
Difference 1. Collection date
We see that the objective of both is the same: to settle amounts owed. But the fundamental difference lies in the moment in which the amount indicated in said document can be collected:
Promissory note : it is necessary to specify the date on which the payment can be made.
Check : no date indicated.