Definition of Restrictive Endorsement
A restrictive endorsement or restricted endorsement places a limitation on the use of a check or other negotiable financial instrument.
Using a restrictive endorsement is one of many actions that a company can take in order to improve the internal control of its assets.
Examples of Restrictive Endorsements
The most common restrictive endorsement is the phrase For Deposit Only written along with the payee’s signature on the back of a check. A similar restrictive endorsement might be Pay to the Order of Sample Bank for deposit to account #xxxx followed by the payee’s signature. Many companies endorse checks by using a rubber stamp containing this restriction.
Another example of a restrictive endorsement is Pay to the order of John Doe, which allows only John Doe to cash the check.
