Definition
Refer to Drawer: This phrase is inscribed on a cheque when the bank refuses to honour it. Common reasons include insufficient funds in the drawer’s account, the bank account being overdrawn beyond agreed limits, bankruptcy of the drawer, or incorrect details on the cheque such as mismatched words and figures, incorrect dates, and more. In some cases, the phrase “please re-present” is also written, indicating that the cheque may be accepted upon a second presentation.
Examples
- Insufficient Funds: John issued a cheque of $500 for a service, but his bank balance was only $300. When the cheque was presented for payment, the bank marked it “Refer to Drawer” indicating insufficient funds.
- Bankruptcy Declaration: A company declared bankruptcy and all its bank accounts were frozen. Any cheques issued by the company henceforth would be returned marked “Refer to Drawer”.
- Incorrect Cheque Details: A cheque issued by Mary had mismatched numerical and written amounts ($50 vs. fifty-five dollars). The bank returned the cheque marked “Refer to Drawer” due to this discrepancy.
Frequently Asked Questions (FAQs)
1. What does “Refer to Drawer” mean on a cheque?
“Refer to Drawer” indicates that your bank has chosen not to honour the cheque. The reasons could vary from insufficient funds to administrative or technical errors in the cheque.
2. Can I present a cheque again after it has been marked “Refer to Drawer”?
If the words “Please re-present” are included, you may represent the cheque again. However, you should resolve the issue, such as ensuring sufficient funds in your account, before re-presenting.
3. Why might a correctly dated cheque be marked “Refer to Drawer”?
Even if the date is correct, other issues, such as insufficient funds, bankruptcy, or mismatched amounts (written vs numerical), may cause the cheque to be dishonoured and marked “Refer to Drawer”.
4. What should I do if my cheque is returned with “Refer to Drawer”?
Contact your bank to understand the reason for the dishonour and take necessary actions, such as depositing more funds into your account or rectifying any administrative errors in the cheque.
5. Can a bank refuse a cheque due to a third-party debt order?
Yes, cheques can be marked “Refer to Drawer” if there is an outstanding third-party debt order against the drawer’s account.
Related Terms
- Dishonoured Cheque: A cheque that the bank refuses to pay.
- Overdrawn Account: When withdrawals from a bank account exceed the available balance.
- Third-party Debt Order: A court order that directs a third party (usually a bank) to pay the creditor out of the debtor’s bank account.
- Bankruptcy: A legal process involving a person or business unable to repay their outstanding debts.
Online References
Suggested Books for Further Studies
- Accounting Made Simple: Accounting Explained in 100 Pages or Less by Mike Piper
- Bookkeeping All-in-One For Dummies by Lita Epstein, John A. Tracy, et al.
- Financial Accounting: An Introduction to Concepts, Methods and Uses by Roman L. Weil, Katherine Schipper, Jennifer Francis
Accounting Basics: “Refer to Drawer” Fundamentals Quiz
Thank you for exploring this detailed overview of the “Refer to Drawer” entry in accounting. Understand the reasons and implications clearly for better financial management and cheque handling!
