Why do USA cheques take so long to clear?

BailMeOut

At AIB a USA cheque takes about 8 weeks to clear and deposit into your account. In my business I receive USA cheques from time to time and AIB cannot every give me any reason that makes sense as to why it takes so long. They have to ship the physical check back to USA where it is processed via another bank and eventually makes it way to AIB and to me.

These cheques are from businesses and in some cases from the US Treasury.

Anyone know if this is just a stupid AIB issue? Will I have same problem with the other banks?

Fortunately most of me dealings are via wire transfer but I hit this cheque problem several times a year and it really messes with my cash flow.

Thanks

Toots

Unfortunately it does take a few weeks for a foreign cheque to clear, it's the case with all the banks. I know where I work we advise the customers that a foreign cheque can take up to 4 weeks to clear if it's lodged into your account on the day you're in the bank. Basically what I'd be saying to them is that even though the money shows in the account straight away, the cheque could still go unpaid for a period of 4 weeks afterwards, so if it's a payment for something they're selling (or similar) not to release the goods until the clearing period is up.

However, the 8 week timeframe is very long and am I right in saying that it takes 8 weeks before the funds are received? What you're describing sounds like they're sending the cheques on collection, which is different. It means that once the funds arrive in to your account, they are already cleared, which is great, but it's not the cheapest way to do things, there's usually a charge on both sides for this. Do you mind me asking are the cheques for large values or anything?

BailMeOut

Toots* wrote: »

However, the 8 week timeframe is very long and am I right in saying that it takes 8 weeks before the funds are received? What you're describing sounds like they're sending the cheques on collection, which is different. It means that once the funds arrive in to your account, they are already cleared, which is great, but it's not the cheapest way to do things, there's usually a charge on both sides for this. Do you mind me asking are the cheques for large values or anything?

This is the case with AIB. Funds are not available to me until the 8 weeks elapses.

The value is usually anywhere from €5k to €20k and there is a bank charge of around €60 per cheque deposited.

unclebill98

Just to clarify.

If the funds are on your balance then they are saying you can not access them for 8 weeks, which is odd cause if they are lodging them that way then they are taking you as a valued/trusted customer by lodging them in the first place cause in theory you can spend away.

If however they are not on your account balance then as explained above they are being sent on a collection basis.

Another point to add certain USA banks have no time limit on claiming on a fraud chq and can claim back as long as they wish. I've had chq's bounce from over a year and in one instance almost 18 months.

nlgbbbblth

Here's how it works.

The bank has two options

1) Lodge the cheque in the normal way via the international clearing system. You get value for the funds straightaway and the bank take their chances. If the cheque bounces then the bank has recourse to your account but you may have spent the funds at that point as it can take up to four weeks for it to be returned unpaid by the US bank. CHARGE FOR THIS TRANSACTION = ZERO, F*CKALL, €2 etc

2) Send the cheque for "collection" or special presentation. This involves the bank posting the cheque to the US bank with an accompanying letter and asking them to send cleared funds back (if the cheque is "good"). The US bank should send the funds back via electronic transfer to a general account in the Irish bank but they're not obliged to - they can just send a US bank draft back instead. CHARGE FOR THIS TRANSACTION = A LOT. Some charge €75 or more

Option 1) will only be exercised for low risk customers. The bank is taking a risk by letting the customer access the funds now (in anticipation of the cheque being paid) so they're going to be selective in whom they do this for.

Option 2) presents no risk to the bank. The bulk of the high charge represent the US bank's handling fees. The Irish bank will charge a fee as well but it's not too much.

Toots

BailMeOut wrote: »

This is the case with AIB. Funds are not available to me until the 8 weeks elapses.

The value is usually anywhere from €5k to €20k and there is a bank charge of around €60 per cheque deposited.

Unfortunately with cheques of that value, your hands are pretty much tied. Even if I knew the customer was mr. megabucks I'd still be sending cheques that size for collection. I'm sure you've already been advised to do wire transfers, but IIRC the US treasury will pretty much only issue cheques. Would you be going back and forth to the US or would you just be dealing with them from Ireland?