Managing cheques and LCN bills of exchange in Morocco

Cheque or LCN: what is the practical difference?

A cheque is a payment order your customer gives to their bank. It is payable on sight: when it is presented, the bank must pay it if the account is funded, even if the date written on it is later. A cheque dated for later therefore protects neither the customer nor the supplier, and using it as a form of credit is risky.

The LCN is a bill of exchange in a standardised format used by Moroccan banks. It carries a maturity date: the customer (the drawee) commits to pay the amount on that date from the bank account shown on the bill. Its standard format allows paperless processing between banks, which is faster and more reliable than a handwritten bill.

In practice, cheques are used for cash or very short-term payment, and LCNs for deferred payment at 30, 60 or 90 days agreed with the customer. Both must be tracked item by item, because each one is a receivable, not money in your account yet.

What is a cheque and bill portfolio?

The portfolio is every cheque and LCN received from customers and not yet collected. It is a real asset: a wholesaler can hold hundreds of thousands of dirhams in bills in a drawer. Without a register, a due date gets missed, the same bill is remitted twice, or nobody knows which customer has actually paid.

Each item needs a record and a status that changes over time. The most useful statuses are the following.

• Received / in portfolio: the item is with you, linked to the customer and the invoice it settles.
• Remitted for collection: deposited at the bank, with the date and remittance slip.
• Discounted: the bank advances the amount before maturity, for a fee.
• Collected: the amount appears on the bank statement and the receivable is cleared.
• Bounced: the bank rejected the item and the customer receivable is reopened.
• Returned or cancelled: the item was given back or replaced by another payment.

How should you organise bank remittances?

A cheque must be presented to the bank within a limited legal period; after that, some remedies are lost. Check this period with your bank and set a simple rule, such as remitting every cheque received by the end of the week. LCNs are remitted a few days before maturity so the bank can process them on time; your bank will tell you the lead time.

Group items by deposit bank on a remittance slip and keep a copy. Record each remittance with its date: that is what lets you match the credit on the bank statement later. If cash is tight, discounting LCNs brings funds in earlier, but it has a cost (interest and fees) and, if the bill bounces, the bank generally takes the amount back from your account.

How do you build a reliable maturity schedule?

The maturity schedule sorts bills by due date. It answers two questions: how much will come in this week and this month, and which bills must be remitted now? Example: you hold three LCNs of 15,000 DH due on the 10th, 20th and 30th of the month, plus an 8,500 DH cheque received yesterday. Expected receipts for the month total 53,500 DH, of which 8,500 DH are available once the cheque is remitted.

Match this schedule against your own supplier payments, salaries and taxes: it is the basis of a realistic cash forecast. A bill is never money in hand until it is collected, so keep a safety margin for possible rejections.

What should you do when a cheque or LCN bounces?

When the bank rejects an item, it returns it with a reason (insufficient funds, signature issue, closed account, stop order and so on). Record the rejection immediately: the related invoice becomes due again, and the bank rejection fees must be booked. Contact the customer quickly, in writing, to obtain a new payment.

Issuing a cheque without sufficient funds is sanctioned by law in Morocco, and the customer's bank may bar them from issuing cheques. Specific collection remedies exist for bills of exchange. Exact procedures and deadlines depend on each case, so get advice from your bank, a lawyer or your chartered accountant before taking action. To prevent problems, monitor each customer's outstanding balance and stop new deliveries beyond a credit limit.

Why is bank reconciliation essential?

Reconciliation means matching each line of the bank statement with recorded transactions: cheque remittances, LCNs reaching maturity, discounting, fees and rejections. It is the only way to know which bills have really been collected and to spot a bounced item nobody reported. Do it at least monthly, and weekly if you receive many bills.

The most common differences are grouped remittances (one credit for several cheques), discount fees charged separately and rejections debited several days after remittance. Your accountant will rely on this reconciliation to validate cash at year end.

How does SOGESTIO handle cheques, bills and banking?

In the SOGESTIO Banking and cash module, every cheque and every LCN bill is recorded with its number, bank, due date and status, and linked to the customer and the related payment. You see at a glance what is in the portfolio, what is coming due and what has bounced.

Bank statements are imported in MT940 or CSV format and reconciled inside the application. The 13-week cash forecast includes customer receivables and supplier payables, and accounting entries are generated automatically on the Moroccan chart of accounts (CGNC). The Banking module is included in the Pro (449 DH/month excl. VAT) and Groupe (990 DH/month excl. VAT) plans, with a 14-day free trial and no card required.

• One record per cheque or LCN: number, bank, due date, status.
• MT940 and CSV statement import, bank reconciliation.
• 13-week cash forecast.
• Customer credit limit to reduce the risk of unpaid bills.
• Automatic accounting entries (CGNC).