The level of scrutiny you apply to the transaction cannot be less than what you would apply if the company payee was a deposit customer of your bank. If Ratchet Corporation were a customer and John Smith came in with a check made payable to Ratchet Corporation, you would satisfy yourself that John Smith is who he says he is, and then you would check your records to make sure you have all the appropriate corporate documents relating to Ratchet, including a corporate resolution which indicates who is authorized to indorse checks on the corporation's behalf. Then, before you would let him obtain cash in exchange for the check, you would make sure the corporate resolution and accompanying documents duly authorized such a transaction. Even then, you might not allow it because you might have a bank policy that precludes you from giving cash back on checks made payable to corporations. These very same precautions and standards must be observed with a noncustomer payee to avoid risk of loss.
Some banks attempt to get around the problem.
Instead of giving cash back to the supposed representative of the corporate payee, they instead exchange the check for a cashier's check from the bank that is made payable to the corporation. The bank reasons that only the corporation can lawfully and properly indorse it, and therefore they have no risk. This is not a good idea, in my opinion. Let's take a hypothetical example to illustrate why I think this practice is dangerous. Inc. She has embezzled from the company for years by taking checks it receives in the mail, forging the company's indorsement on them, and taking the cash.