What is On-Us Item?
266 reads · Last updated: December 5, 2024
An on-us item is a check or draft that is presented to the bank where the check writer has the funds on deposit, as opposed to the depositor's bank (although in some cases both check writer and depositor may happen to use the same bank). The check can then be cashed or deposited into another account.Of course, the drawing account must have a sufficient balance to pay the check.
Definition
An on-us item refers to a check or draft that is submitted to the bank where the payee has an account, rather than the bank of the depositor. Even if the payee and the depositor use the same bank, the check can still be cashed or deposited into another account. The account on which the check is drawn must have sufficient funds to cover the check.
Origin
The concept of on-us items originated with the development of banking systems to simplify the check processing procedure. As banking networks expanded and technology advanced, this concept became widely used, especially in interbank transactions.
Categories and Features
On-us items are primarily categorized into two types: cashing and depositing. Cashing refers to the payee receiving cash directly from the bank, while depositing involves the check amount being credited to the payee's bank account. Both require the check-drawing account to have sufficient funds.
Case Studies
Case Study 1: A company receives a check from a client, which is from a different bank. The company submits the check to its own bank for on-us item processing. After confirming sufficient funds in the check account, the bank credits the amount to the company's account. Case Study 2: An individual receives a check from a friend, drawn on the same bank. The individual opts for on-us item cashing, receiving cash directly from the bank.
Common Issues
Common issues include insufficient funds in the check account leading to dishonor, and longer processing times for interbank transactions. Investors should ensure sufficient funds in the check account and be aware of different banks' processing times.
