On Us Item

When a cheque is deposited at a different bank from the one it is drawn on, the two banks must exchange it through a clearing house, and the funds move between them. That process takes time and involves fees.

With an on-us item, the same bank sees both sides of the transaction and simply debits one account and credits the other. For the customer, the benefit is speed.

Banks often release funds on on-us items sooner than on items drawn elsewhere, because the bank can check right away whether the payer has enough money. The cheque also avoids the risk of delay from a third party.

For the bank, the benefit is lower cost. It avoids clearing fees, reduces the handling of paper and has direct visibility of the payer's balance.

Banks track the share of items that are on-us as a measure of how much of their volume stays within their own network. On-us items still carry risk.

A cheque may bounce because the payer has insufficient funds, the account may have been closed or the signature may be forged. Banks therefore apply their own rules on holds, and a large on-us deposit may be delayed while the bank reviews it.

For businesses, the concept matters when choosing a bank and managing cash. A company that receives many cheques from customers who use the same bank may get funds sooner, and that improves working capital (the cash tied up in day-to-day operations).

Treasury managers often ask banks about availability schedules, which set out how soon deposited funds can be used. When cheques are replaced by electronic payments, the on-us idea carries over in a different form.

A transfer between two customers of the same bank is booked internally and usually arrives faster than a payment sent across an external network. Banks still report these internal movements separately because they affect fee income, settlement risk and the liquidity the bank must hold during the day.