Accepting cheques from Nigerian customers
The CBN cheque cap, third-party encashment limit and T+1 clearing, and how a Nigerian business records a cheque from receipt until it clears or bounces.
By Achekam · · 5 min read · For Running a business businesses in Nigeria
Transfers have taken over most business payments in Nigeria, but cheques have not disappeared. Government agencies, older family businesses, schools collecting fees and some corporate customers still pay by cheque, and a business that refuses them can lose the work.
A cheque is also the payment method most likely to be recorded too early. It arrives on a Monday, everybody treats it as money, and only later does someone notice it was never paid in, or that it came back unpaid. This article covers the Central Bank of Nigeria's cheque limits and clearing cycle as the CBN describes them, and a simple way to keep the books honest while a cheque is in transit.
The cheque cap and the third-party encashment limit
The CBN lists two limits among its payments system measures.
- The cheque cap. The CBN lists a cheque cap of ₦10 million, introduced in 2010, among its measures. The same measure appears on its page as "Maximum Cap on Cheque". The page does not explain how the cap is applied.
- Third-party encashment. The CBN set a ₦150,000 limit on encashment of third-party cheques in 2013. Encashment means a cheque being paid out in cash over the counter to someone other than the account holder, rather than paid into an account.
Both figures come from the CBN's list of payments system achievements, which runs from 1993 to 2023. The CBN's page does not say whether either limit has since been revised. Before you rely on them, for example by refusing a large cheque or telling a customer how to split a payment, check current CBN circulars or ask your bank.
For a business, the practical point is simple. Large payments belong in a transfer, and a cheque made out to you should be paid into your business account, not cashed by whoever happens to collect it.
Clearing cycles and truncation
Clearing is the time between paying a cheque in and the money becoming yours to use. The CBN reduced the clearing cycle from T+2 to T+1 in Lagos in 2012, and lists a reduction of the clearing cycle to T+1 from T+2 in 2013, the year cheque truncation was implemented nationwide. Truncation means the cheque's image and data travel between banks instead of the paper itself.
"T+1" means the cheque clears on the working day after it is presented. That describes the system as the CBN recorded it historically; the page may not reflect later changes, and your own bank's cut-off times decide which day counts as day one. A cheque deposited late in the afternoon may be presented the next day.
Checking the current rules
The CBN's Payments System Supervision page describes its mandate over the payment system and lists measures such as the cheque cap, the clearing cycle and card and POS rules, along with a history of when each was introduced. Use it to understand where a rule came from, then confirm the current position with your bank before you put a limit into a customer policy.
Recording the cheque against the invoice
The question for your books is when the cheque counts as a payment. A sound approach is to record the receipt when the cheque is banked, then confirm it when the money appears on the statement.
In Achekam a business records customer payments against one invoice or spread across a customer's invoices. A part payment leaves the invoice part-paid, and any extra is held on the customer's account. So a school that receives one parent's cheque covering two children's fees can spread it across both invoices, and a cheque for slightly more than the bill leaves a credit on that parent's account rather than disappearing.
Write the cheque number and the bank it is drawn on in the receipt reference. When a query comes later, that is the detail everyone asks for.
Matching the cleared amount, and the cheque that bounces
There are no bank feed connections for Nigerian banks in Achekam, so statements come in as files. A business imports bank statements as PDF, CSV, Excel, OFX, QIF, MT940 or CAMT.053, and each import is checked so that the opening balance plus movements equals the closing balance. The step-by-step version is in bank statements without feeds.
Bank lines are then matched by suggestion and a person accepts each match. A reconciliation completes only when nothing is left unexplained, or the difference is nil, which is exactly what you want for a cheque that has been banked but not yet cleared: it stays visible as an explained item until the bank catches up.
One limit matters here. In Achekam, matching a bank receipt to a customer invoice does not record the payment on the invoice; it must also be recorded in receivables. Do both: the receipt in receivables, and the match on the bank line.
If the cheque bounces, the bank statement will usually show it paid in and then returned. The receipt has to go too. In Achekam a receipt can be re-allocated, and administrators can refund or reverse it, which puts the invoice back to unpaid. Then chase the customer, and ask for a transfer next time. For the other ways naira customers pay, see collecting naira payments.
A cheque policy for your customers
A short written policy saves arguments. It might say:
- Cheques are made out to the business's registered name, never to a staff member.
- Cheques are banked within a set number of days of receipt, and logged when received.
- Goods or services that depend on payment are released once the cheque has cleared, not when it arrives.
- Large amounts are paid by transfer, in line with the CBN's cheque cap as your bank applies it.
- A returned cheque is reversed in the books on the day the bank reports it, and the customer is asked to pay another way.
- Repeated returned cheques lead to the customer losing the option of paying by cheque.
Share the policy with customers before the first cheque arrives, not after the first one bounces.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
