AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A bounced cheque does not cancel the debt behind it. In Nigeria you can ask the drawer to fund the account and re-present, send a written demand, report the cheque under the Dishonoured Cheques (Offences) Act if it was presented within three months of its date, and sue for the amount, for example in the Lagos small claims court for up to ₦5,000,000.
First, read the return reason
When a cheque comes back unpaid, your bank returns it with a reason. That reason decides your next move, so keep the returned cheque and any return slip safely; they are your main evidence.
| Return reason (typical wording) | What it suggests | Usual next step |
|---|---|---|
| Insufficient funds / refer to drawer | The account could not cover it | Demand, re-present, consider the Act |
| Account closed | The drawer closed the account | Demand and civil claim; consider the Act |
| Signature differs / irregular | A technical defect | Ask the drawer for a fresh cheque |
| Stale or post-dated | Presented too late or too early | Ask for a replacement |
| Payment stopped | The drawer instructed the bank not to pay | Ask why in writing; civil claim if no good reason |
The exact wording varies by bank. If the reason is unclear, ask your bank to explain it in writing.
Option 1: ask the drawer to fund the account and re-present
Most bounced cheques end with a phone call. Tell the drawer the cheque was returned and the reason, and agree a date by which the account will be funded. Then present the cheque again. Under the clearing rules the CBN introduced in 2018 (reported by BusinessDay), paper instruments clear on a T+1 basis, meaning a cheque is treated as paid by 10pm on the next working day unless it is returned. So you will know quickly whether the second attempt worked.
If the drawer offers a transfer instead, take it, but keep the cheque until the money has landed and you have confirmed it on your own statement.
Option 2: a written demand
If the call fails, write. A demand letter should state the cheque number, date, amount, the bank's return reason, the transaction it was paying for, and a deadline (14 days is common and matches the Lagos small claims procedure). Send it by a route you can prove: email with read receipt, courier, or hand delivery with an acknowledged copy. Keep it factual and avoid threats you cannot carry out.
Option 3: the Dishonoured Cheques (Offences) Act
Nigeria treats some dud cheques as a crime. Section 1(1) of the Dishonoured Cheques (Offences) Act makes it an offence to obtain property or credit with a cheque that is dishonoured for lack of funds when presented within three months of the date on the cheque. The Act sets these penalties:
- Individual
- Imprisonment for two years, without the option of a fine
- Company
- A fine of not less than ₦5,000; officers responsible can be liable as individuals (section 2)
- Defence
- The drawer reasonably believed the cheque would be honoured (section 1(3))
- Paying an existing debt
- Section 1(2)(b) treats a cheque issued under an enforceable contract as obtaining credit
In practice you report to the police with the returned cheque, the return slip and your demand letter. Two cautions. Prosecution is the state's decision, not yours, and a conviction does not automatically put money in your account. And using the threat of arrest to force payment can backfire; keep your communications calm and factual. The three-month window matters: present the cheque promptly.
Option 4: sue for the debt
A cheque is strong written evidence that money is owed. In Lagos, the Small Claims Court practice directions cover liquidated money demands of up to ₦5,000,000 (excluding interest and costs). You serve a Letter of Demand on Form SCA 1, wait 14 days, then file a complaint on Form SCA 2. You can represent yourself, and the directions aim for judgment within 60 days of filing. Larger sums, or cases outside Lagos, go to the magistrate or high court depending on the amount and your state's rules.
Worked example
Example only. Musa sells a generator for ₦650,000 and accepts a cheque dated 2 March. It is returned on 4 March, "insufficient funds". He calls the buyer, who promises to fund the account by 10 March. On 11 March Musa re-presents; it bounces again. On 12 March he serves a written demand giving 14 days. On 27 March, with no payment, he reports to the police with both return slips and files a small claims complaint. His reporting is well inside the Act's three-month presentation window because both presentations were in March.
What to check first
- Keep the original returned cheque. Do not hand it over without a receipt.
- Note the cheque date and present within three months of it.
- Check the drawer's full name and address from the cheque and your records.
- Before taking another cheque from the same person, ask for a transfer or a bank draft instead.
Where Pryme fits
For sellers who would rather avoid cheques, a bank-transfer checkout lets customers pay by transfer, and every payment can come with a verifiable receipt. Before releasing goods against any payment, read how to confirm a transfer; for the arrest question, see can a bounced cheque get you arrested.
Questions people ask
Is issuing a dud cheque a crime in Nigeria?
It can be. The Dishonoured Cheques (Offences) Act makes it an offence to obtain property or credit with a cheque dishonoured for lack of funds when presented within three months of its date, unless the drawer reasonably believed it would be honoured.
How long do I have to present a cheque?
For the Act to apply, it must be presented within three months of the date on the cheque. Banks also treat old cheques as stale; ask your bank for its rule.
Can I re-present a bounced cheque?
Yes, if the drawer funds the account. Agree a date, present again and keep the cheque until the money is on your statement.
Can I take someone to small claims court over a bounced cheque in Lagos?
Yes, for sums up to ₦5,000,000 excluding interest and costs, after serving a Letter of Demand (Form SCA 1) and allowing 14 days.
Sources
- Dishonoured Cheques (Offences) Act, Laws of the Federation (PLAC) · accessed Oct 2026
- BusinessDay: CBN gives September 1 date for revised clearing rules (2018) · accessed Oct 2026
- Lagos State: Small Claims Court Practice Directions (file dated 17 Dec 2025) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.