Who does the payee refer to on a cheque?

The payee on a cheque refers to the person or entity who is receiving the payment. When a cheque is issued, it is made out specifically for this individual or organization, indicating that they are the designated recipient of the funds when the cheque is presented for payment. This means the cheque is written to them and they are the ones who can cash or deposit it.

Understanding the role of the payee is crucial in the context of financial transactions, as they are the party entitled to receive the amount specified on the cheque. In practice, the clarity of who the payee is serves to ensure proper handling of the cheque and that funds go to the correct person or organization. In contrast, the bank is the institution facilitating the transaction, the drawer has written and issued the cheque, and the bank's customer refers to someone who may have an account with the bank but is not necessarily the payee. Therefore, the correct identification of the payee as the person for whom the cheque is made ensures a clear understanding of who is meant to receive the funds.