What is a significant risk when using cheques as a payment method?

When using cheques as a payment method, a significant risk is that the payer may have insufficient funds. This situation can lead to a cheque being returned unpaid, which is commonly referred to as a "bounced" cheque. If the cheque is presented for payment and there are not enough funds in the payer's account to cover the amount, the financial institution will not honor it, resulting in the payee not receiving the expected funds.

This risk is a critical consideration for individuals and businesses accepting cheques as it can affect cash flow and create potential administrative complications when attempting to secure payment. Understanding this risk emphasizes the need for proper vetting of a payer's financial stability or the use of alternative payment methods that may mitigate such risks.