Money & Payment

In Part 1 (page 36 – August issue), I categorised risk into five categories, namely; 1. PEOPLE, 2. MONEY, 3. LAW, 4. SERVICE and 5. ECOLOGY. I will be dealing with the risk profile of each, i.e. broadly speaking the areas of risk that any business is exposed to can been allocated under these five categories.

In Part 2, (page 22 – September issue), I covered the category of ‘People’ under four sub-categories: Staff (discussed in Part 1); Third party service providers (‘TPSP’); and Business Associates.

Part 3 (page 24 – October issue), continued with ‘People’ as Customers. I will now discuss the 2nd category, namely ‘Money’.



The original form of payment of course was barter. The latter has been resuscitated in recent years but is still mostly done on a handshake basis. Even the CPA refers to it i.e. the definition of ‘consideration’ includes ‘barter’!

As with most agreements of course the danger lurks in areas such as who owns the intellectual property (‘IP’) i.e. copyright. And what about accountability and responsibility? It is therefore important to record even something as ‘trivial’ as a barter agreement in writing.

Money as a form of payment eventually superseded/supplemented barter as a form of payment. Unfortunately as in all walks of life the creative con-artists evolved and as quickly as ‘the real thing’ and soon counterfeit currency appeared. Over time this ‘practice’ has become so sophisticated that very advanced equipment if required to identify counterfeits. It is made available mainly by banks and often at competitive prices and no cash business should be without it!

Linked to such ‘blatant & direct’ fraud is the more sophisticated method of purportedly depositing cash into someone’s account and the ‘depositor’ having the cheek to fax/scan and e-mail the creditor the ‘deposit slip’! Suppliers are cautioned not to act upon such purported payments/deposit slips until payment has been verified with the bank and is reflected in the creditor’s bank account as received and cleared. Supplier T&C, invoice and statement should contain clauses to that effect.


However antiquated the cheque may be, there are still some people using them, be it the account holder or business asking for a cancelled cheque in order to record the supplier on the accounting system. Try and avoid the latter, and rather ask your bank to send the business a letter confirming you as the account holder.

If your client insist on paying you by cheque, then implement as many of the following safeguards as possible:

• Have a clause in your T&C addressing e.g. interest, bank charges and lost/declined cheques;

• See ‘cash’ above re the payment reflecting in your account;

• Preferably insist on a bank cheque/bank guaranteed cheque;

• Ensure that the party issuing the cheque is the party you’ve contracted with, thus ensuring your T&C are applicable;

• Do not accept personal cheques.

If your have to pay by cheque, then implement the following safeguards:

• Cross the cheque by writing in the top left corner in between two parallel lines ‘Account payee’ + ‘Not negotiable’ + ‘Not transferable’;

• Delete ‘order’ (Above the amount in figures) and write above it ‘only’;


• Ensure that the payee’s full registered name as it appears (or should appear) on your records is stated on the cheque;

• Do not use abbreviations;

• Do not use a trading name (i.e. ‘trading as ….’);

• If the name does not fill the space provided for on the cheque, draw a horizontal line to fill the space as possible to avoid any skulduggery!;

• Never issue a personal cheque on behalf of your company or close corporation in order to avoid personal liability and ensure that below your signature you insert ‘for and on behalf of …’ followed by your business’ name.

Disclaimer: This article is intended to provide a brief overview of legal matters pertaining to the travel and tourism industry and is not intended as legal advice. © Adv Louis Nel, ‘Louis The Lawyer’, November 2014.

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