Page 40 - Office Practice and Accounting 10

1. Cheque
A cheque is an unconditional written order issued by an accountholder (drawer) to
bank(drawee) to make payment of written amount to a party or person specified.
It is commonly used in home trade for making payment of larger amount of bill.
Comparatively payment through cheque is considered as safe and comfortable in
business. Normally, three types of cheque like Bearer Cheque, Order Cheque and
Crossed Cheque are used for making payment of bills.

2. Bank Draft

A bank draft may be defined as a cheque drawn by one bank either on another bank
or on its own branch. Under this method, the buyer deposits the required amount
along with bank charge in local bank and gets a draft made in the name of the seller.
The buyer sends the draft to the seller by post or courier. It is the most convenient
method which the commercial bank offers for remitting money from one place to
another. Usually a bank draft is payable on demand. It can be collected only through
a bank.

3. Telegraphic Transfer (T.T.)
T.T. is the quickest means for remitting a large sum of money in and outside the
country. T. T. is an order issued by a bank to another bank to pay a certain sum of
money to the specified person. Under this method, the buyer deposits the money
including T.T. charge at his local bank. The bank gives order to its branch through
telegraph, fax or e-mail to pay the amount to the person named in the order. After
receiving the information, the seller collects the amount of T.T. from his banker. It is
costlier than bank draft.

4. Letter of Credit (L.C.)
A letter of credit is a sort of guarantee issued by a bank certifying the financial position
of the party, in respect of which such letter is issued. Under this method, the importer
deposits certain amount, payable charge and foreign exchange charge in his local
bank and obtains the L.C. documents. When the exporter receives it, he dispatches
goods along with the invoices. The exporter presents the LC number to his local bank
and gets the payments .

5. Automated Teller Machine / Card (ATM)
Automated Teller Machine is computerized device outside a bank that supplies cash
or account information when the user inserts a cash card and keys in an identification
number. Using automated teller machine, customers can access their bank deposit or
credit accounts in order to make a variety of transactions such as cash withdrawals,
check balances, or recharge mobile phones. Today banks have been performing
computerized banking system. They are providing quick and easy banking services

34 Office Practice and Accounting 10