Draft checks are a payment method that debits funds from your account only when your vendor deposits the check. This guide explains how draft checks work and how to manage them effectively.
This guide will cover:
- Understanding draft checks
- When are draft checks used
- Identifying draft checks in the Payments tab
- Marking draft checks as paid
- Marking draft checks as unpaid
- Voiding draft checks
Understanding draft checks
A draft check is a check sent on your behalf that withdraws funds directly from your account when the vendor deposits it. Unlike standard paper checks, draft checks only deduct funds after the vendor receives and deposits the check.
Draft checks are only debited after the vendor deposits them. Funds will be debited once the check is deposited and cleared.
The system doesn't automatically mark these checks as paid, so you'll need to manually update the payment status once funds are debited.
How are draft checks different from corporate checks?
Corporate checks are another type of paper check payment available in pay business bills. Unlike draft checks, corporate checks debit funds from your account when the check is delivered to the vendor, not when it's deposited.
Here's how corporate checks work:
- Funds are withdrawn from your account on the delivery date.
- In the Payments tab, the debit date will be the same as the delivery date.
- The check is sent via USPS and typically arrives within 5-7 business days.
- Your payment is automatically marked as paid when the check is delivered.
- You don't need to manually update the payment status.
The payment method (draft check vs. corporate check) is automatically determined based on various factors- you cannot manually select a corporate check as a delivery method.
Draft check vs. corporate check vs. standard checks
| Payment Method | When Funds Are Debited | Delivery Timeline of the check | Key Difference |
| Draft check | When the check is deposited | 5-7 business days via USPS | Debit date depends on the vendor's deposit timing |
| Corporate check | When the check is delivered | 5-7 business days via USPS | Funds are debited when the check is delivered |
| Paper check sent by Melio | Funds are debited 5-7 business days before your selected delivery date | 5-7 business days via USPS | Funds are debited before the check is delivered |
To understand more about the debit and delivery dates of standard checks, please see the following guide.
When Are Draft Checks Used?
Draft checks are automatically selected for check payments to verified vendors in the pay business bills Billers Directory or for recurring payments and future-dated payments that were scheduled with local vendors before migrating to pay business bills.
Draft checks are automatically selected for check payments to verified vendors in the pay business bills Billers Directory or for recurring payments and future-dated payments that were scheduled with local vendors before migrating to pay business bills.
What is the pay business bills Billers Directory?
The pay business bills Billers Directory is a comprehensive list of national and local vendors that have been verified. This includes vendors from various industries, such as:
- Telecommunication companies
- Financial institutions
- Utility services
- Food & beverage companies
- And many more
How to identify verified vendors
Verified vendors (also called "billers") in the pay business bills directory appear with a verification badge next to their name, making them easy to identify.
Benefits of paying verified vendors
- Discovery: Easily find and pay billers.
- Pay quickly: No need to collect and save vendor delivery details - if they're in the directory, you can pay them in just a few simple steps.
- Security: Pay through a directory of verified vendors approved by our risk and compliance teams.
Additional cases for draft checks
Draft checks may also be used for recurring payments that were previously scheduled to local vendors before migrating to pay business bills.
The payment method is determined automatically based on various factors - you cannot manually select a draft check as a delivery method.
Identifying draft checks in the Payments tab
In the Payments tab, draft checks can be identified by their debit date. For these checks, instead of an actual date, the Deposit date will be listed.
You can also recognize a draft check in the payment and bill details by selecting the payment or selecting View payment.
Once you have accessed the payment and bill details, you will see the following information that indicates it is a draft check:
1- A note at the top explaining that funds will be debited when the check is deposited
2- The debit date listed will be “Deposit Date’.
Marking draft checks as paid
Unlike other payments, draft checks aren't automatically updated to paid when funds are debited. You need to manually mark these payments as paid when funds are deposited from your account.
You can change the status to paid in two ways:
Marking draft checks as paid using the Action menu
1- In the Payments tab, find the draft check payment.
2- Select the 3 dots on the right side of the payment to open the Action menu.
3- From the Action menu, select Mark as paid.
4- In the pop-up menu, select Mark as Paid.
5- Your payment will now be updated, and the status will change to "Marked as paid".
Marking draft checks as paid in the Payment and bill details
1- In the Payments tab, find the draft check payment.
2- Access the Payment and bill details by selecting the payment or selecting View payment.
3- Once in the Payment and bill details, select the Mark as Paid button at the bottom of the screen.
4- In the pop-up menu, select Mark as Paid.
5- Your payment will now be updated, and the status will change to "Marked as paid".
Marking draft checks as unpaid
If you mistakenly mark a draft check as paid, you can easily undo this. There are two ways to mark a draft check as unpaid:
Marking draft checks as unpaid using the Action menu
1- In the Payments tab, find the draft check payment.
2- Select the 3 dots on the right side of the payment to open the Action menu.
3- From the Action menu, select Mark as unpaid.
4- The status and debit date will now be updated accordingly.
Marking draft checks as unpaid in the Payment and bill details
1- In the Payments tab, find the draft check payment.
2- Access the Payment and bill details by selecting the payment or selecting View payment.
3- Once in the Payment and bill details, select the Mark as unpaid button at the bottom of the screen.
4- The status and debit date will now be updated accordingly.
That's it! You now understand how draft checks work and can effectively manage them in your pay business bills account.
Voiding draft checks
Please note that self-service voiding is not available for draft checks. To void a draft check, you'll need to contact support. To find the support number, follow these steps:
1- In the Payments tab, find the draft check payment.
2- Access the Payment and bill details by selecting the payment or selecting View payment.
3- Once in the Payment and bill details, select the Void Check button at the bottom of the screen.
4- A pop-up with the contact details will appear.