What Is a Postdated Check?

what are post dated checks

The main reason the law lets banks cash post-dated checks is that it’s too hard to look at checks for their date. Processing 45,000,000 checks a day is tough enough, without looking at dates. But just about anything with the right signature on it is properly payable, including post-dated and overdrawn checks. Unfortunately, this is not always honored by banks or the organization cashing the check. First, let’s take a look at some possible reasons why you would want to postdate a check.

what are post dated checks

This example shows how a post-dated check can be used as a promise for future payment. However, it’s important to remember that the acceptance and handling of post-dated checks can vary by country, state, or even between different banks. Always check with your bank about their policy on post-dated checks to ensure they will be handled as expected.

Postdated Check: Is it Legal & How to Write One

But when someone does intend to honor a check and post-dates it to make sure they can cover it, they haven’t committed any crime. That said, there might still be some things to think about when it comes to post-dating checks, as noted below. Where a demand for payment of a cheque is made before the date of the cheque arrives, the cheque shall not, by reason of the demand, be taken to have been duly presented for payment. With pre-authorized debit, the beneficiary schedules regular withdrawals directly from your bank account. Section of the Uniform Commercial Code states that a bank may charge against the account of a customer an item that is properly payable from that account.

Your landlord asks you to pay your rent on the 1st day of every month. On the other side, the recipient may not be aware of this and he may deposit the cheque into bank resulting in a cheque bounce. This will not cost you in terms of additional charges that a bank may charge you but a loss of credibility and relationship that has been built so far. Here, it is important to note that cheque will be presented to the bank either on the date written on cheque and after the date.

What Is A Post Dated Check

BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. Support our advertisers and sponsors by clicking through to learn more about their products and services. However, postdating a check can lead to inconveniences and ill feelings for the payee, such as when a tenant sends a rent check and may or may not have the funds ready to be withdrawn.

what are post dated checks

For example, paying for a service before it is completed — like a contractor working on your house. On 31st May 2021, the supplier accepted the cheques and agreed to deposit them on the dates mentioned. On 15th June 2021, the supplier increased the cash by $2,500 by depositing the first post-dated cheque while reducing the accounts receivable by $2,500. On 15th July 2021, the supplier deposited the second post-dated cheque, repeating a similar transaction. So, there shouldn’t be any journal entries to record in the drawer’s books, i.e., there should be no reduction in cash until the specified date. Also, the recipient shouldn’t make any entry in their books, i.e., there shouldn’t be any increase in money until the selected date.

Now, you are in a situation where you have one or more post-dated cheques received as well as issued? Also, you need to have a special accounting treatment so that the transaction will automatically affect the accounting books on the date of the post-dated cheque. Be prepared for the possibility that the check funds won’t be available. Not only do you not want to incur an insufficient funds fee, you don’t want to go through the trouble of obtaining a reissued check.

Auditor Treatment of Post Dated Checks

So, the date mentioned in the cheque effectively postpones the recording of the underlying transaction. The drawer will capture the transaction accordingly on the specified date, reducing cash and payables recorded. At the same time, the recipient will book an increase in cash and a decrease in receivables.

what are post dated checks

In Serbia post-dating cheques is a customary practice in the retail industry. The retailers will usually accept post-dated monthly cheque payment installments up to several months in advance allowing their customers to pay for expensive goods as a sort of a line of no interest credit. In commercial transactions, banks are also given the right to process a check to the extent it is valid and correctly written. If that’s the case, you’ll need to contact your bank to specifically inform them not to cash the check until the date appearing on the check.

Latest Operations – Post-dated checks Topics

In such cases, the defendant’s admission, if believed, would provide the required proof of the defendant’s criminal intent to defraud the victim with a postdated check. Be sure to verify your bank or credit union’s policy on writing post dated checks so there’s no surprise to you. On June 4, when the supplier receives Jim’s postdated checks, the supplier should not debit cash nor credit accounts receivable. The reason is that the checks cannot be turned into cash prior to the dates shown on the checks. If you write a check and don’t have enough money in your account when it’s cashed — whether or not it’s postdated — your bank can cover the payment or let the check bounce based on its overdraft policy. If it doesn’t go through, the recipient might charge you late fees and a bounced-check fee.

  • Still, she tells Consumerist that the bank in question agreed to remove the overcharge fees incurred as a result of the situation.
  • For example, if today’s date is July 29, 2023, and you write a check but date it for August 29, 2023, you have written a post-dated check.
  • The recipient of a post dated check should be mindful of the risks of potentially not getting paid in the event the bank does not honor the check.
  • One noteworthy topic had to do with post-dated checks and what happens to them when you attempt to deposit or cash the checks before the date written on them.
  • (2) A cheque is not invalid by reason only that- (a) it is not dated; (b) it is antedated or post-dated; or (c) the date it bears is a Sunday.

As a result, many businesses and companies may accept post dated checks but will not deliver the goods or render services for several days to ensure that the check is cashed and cleared by the bank. Auditors do not like to see post dated checks, since it implies that the payer is short on cash, and is attempting to pay bills later than it should. Since a time lag exists between when a person writes a postdated check and when a banker cashes it, sensitive information can remain exposed and vulnerable for days, weeks, or even a month.

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But you can ask your bank to delay cashing a specific check, and, depending on your state and the bank, it might comply. A check delivered now with a written date in the future, so that it cannot be cashed until that date. If you are the payee, cashing a postdated check is the same as cashing any other type of check. Since it’s postdated, logins 2020 it’s a courtesy to cash it at the writer’s bank. Whether a post-dated cheque may be cashed or deposited before the date written on it depends on the country. A Canadian bank, for example, is not supposed to process a post-dated cheque and if it does so by mistake, the cheque writer may ask their bank to correct the error.

However, the recipient must trust that the writer of the check will have enough money in his or her bank account to cover the check value. In this case, you’ll write a post dated check for $500 by putting a date after the date you’re expecting to be paid. You may choose to give your landlord twelve post dated checks covering your rent for the next twelve months.

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Post-dated cheques are used as short-term credit or loans and help businesses expand. It allows running business operations without stopping for lack of funds. Drawers also use it to avail products and services before paying for them upfront. Overall, it is a powerful financial instrument if used wisely and strategically. In this way, Sam assures Bob of the payment on a specific date in the future when Sam is confident he’ll have sufficient funds in his account. Most people now have access to their bank account online where they can process payments.

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