How to Cash a Money Order Made Out to a Business

Money orders offer a secure, prepaid alternative to cash or personal checks, providing a reliable way to transfer funds without sharing sensitive bank account details. Businesses often receive them as payment. This article guides businesses through converting a money order made out to their entity into usable funds.

Preparing the Money Order and Documentation

Before attempting to cash or deposit a money order, businesses must ensure proper endorsement and gather necessary documentation. Endorsing a money order made out to a business typically involves writing the business name on the back, followed by a signature from an authorized individual. Sign the money order in the presence of the teller or service agent to prevent issues if it is lost or stolen.

Businesses should also prepare several documents to prove their legal existence and the authority of the individual conducting the transaction. This includes foundational business documents such as Articles of Incorporation or Organization, or a Doing Business As (DBA) filing. The business’s Employer Identification Number (EIN) may also be required.

The individual presenting the money order will need a valid government-issued photo identification, such as a driver’s license or passport. Proof of their authority to act on behalf of the business is important; this might be a corporate resolution, a partnership agreement, a formal letter of authorization, or being a listed signatory on the business’s bank account. Examine the money order for security features like watermarks or security threads.

Choosing a Cashing or Deposit Location

Businesses have several options for converting a money order into funds, with depositing it into an existing business bank account often being the most straightforward method. Most financial institutions will accept money orders made out to their account holders for deposit, similar to how they handle a check. Funds from a deposited money order may become available relatively quickly, often within one to two business days, although larger amounts or new accounts could experience longer holding periods.

Another option is to cash the money order at the issuing institution, such as the U.S. Postal Service (USPS), Western Union, or MoneyGram agent locations. Cashing a USPS money order at any Post Office is typically free, and other issuing agents may also offer lower fees or no fees for their own money orders. However, it is important to note that not all locations that sell money orders are equipped to cash them.

Check cashing services provide an alternative, particularly for businesses without a traditional bank account or those needing immediate cash. However, these services typically charge higher fees, often a percentage of the money order’s value, which can range from 1% to 5% or more. They may also have more stringent verification processes for business money orders due to increased risk.

Completing the Deposit or Cashing Process

Upon arriving at the chosen location, the authorized individual will present the endorsed money order along with the required business documentation and their personal identification to the teller or service agent. The teller will verify the money order’s legitimacy, confirm the business’s details, and confirm the individual’s authority to conduct the transaction. This verification process prevents fraud and ensures proper handling of funds.

Once verified, the funds will either be disbursed in cash, if cashing, or deposited directly into the business’s bank account. It is important to obtain a receipt or deposit slip as proof of the transaction for accurate record-keeping. While some locations, the issuing institution or your own bank, offer free cashing or depositing services, others, such as non-account banks or check cashing services, impose fees ranging from a few dollars to a percentage of the money order’s value.

For deposited money orders, funds may not be immediately available. Financial institutions often place a hold on deposits to ensure the funds clear from the issuer, with availability typically ranging from one to five business days depending on the bank’s policies and the amount. It is important for businesses to retain a copy of the money order and the transaction receipt for their financial records, for reconciliation and proof of payment.