What Is The Difference Between A Drawer, Drawee, Payee?

There are three parties that are involved when it comes to writing an outstanding check. These are: The drawer, the drawee and the payee. The drawer is the person who writes the check, although they must have the authority to do this. The drawee is the place (bank) where the check is drawn out of. And finally, the payee is the person who receives the payment when the check has been cashed by the drawee (bank).

• Checking account.

A checking account that is available from any kind of major bank that allows the person who owns the account to deposit funds inside. That person can also write checks and the funds are removed from that account. A check is kind of an official statement from the person who own the account that the funds stated on the check are allowed to be removed from the account and deposited into another person's account.

• Endorsement of a check.

When a person signs a check to be deposited, they are endorsing that check and giving permission to the bank for the funds to be taken out of that account. The name of the payee that is written on the check is also a kind of way of confirming that person's authority to receive the stated amount of money into their own account.

• Outstanding check.

An outstanding check is a check that has been written and signed but has not been given into the bank for the process of transferring funds to begin. The payee will therefore have received their funds. If the payee does not deposit the check in the original bank, there are complications that will proceed, although it can still be done. The check is considered to be outstanding until the drawee's bank has taken the funds out of the bank account and deposited them into the payee's.