People who deposit the checks at the bank often write "Deposit Only" on the back of the check. "Deposit Only" is a restrictive endorsement that prevents anyone from cashing the item, and it also ensures that the item will be deposited into the account of the payee. Many business owners who make infrequent visits to the bank use restrictive endorsements to prevent stolen checks being misdirected into other accounts. Lost checks without endorsements are easy for people to negotiate if they make a special endorsement and sign the stolen check over to themselves.
Examine the check to ensure the drawer filled out the "Pay to the Order of" line correctly. Some people use initials rather than full names or abbreviate business names, but the check writer must complete the check in a way that the payee is easily identifiable.
Turn the check over. On the back left side of the check there are two vertical lines close to the edge of the check and about two inches apart. Turn the check sideways so that the lined area is at the top of the check as you view it. The highest of the two lines is blank, and the second line has a warning explaining that no endorsements can be below it.
Sign the check. If the check is a personal check or one addressed to a sole proprietorship business, the payee signs on the top line. Other business checks should not be signed.
Write "Deposit Only" in the area between the two lines on the back of the check. Below "Deposit only" write the account number of the deposit account the check is going into. For business checks, write the name of the business as listed on the deposit account and the account number.
Banks provide stamps for business owners that contain all of the information needed to make a restrictive endorsement. The use of stamps saves time and reduces the chances of checks being misdirected due to poor writing confusing the tellers.
Sometimes banks return deposited checks because the drawer has insufficient funds at the time of the checks presentation. Drawee banks will exchange checks for cash or cashiers checks once funds become available, but if the payee uses a restrictive endorsement, the item cannot be negotiated in this way. Checks with restricted endorsements that bounce must be redeposited in the payee's account, and it usually takes at least one business day for the item to reach the drawee's bank, by which time funds may insufficient to cover it. Most banks allow customers to deposit the same check only twice. There are no restrictions on the number of times a person can take a check to the bank it is drawn from and check on the availability of funds.