Postdated Check: Is it Legal & How to Write One
In truth, issuing a PDC cheque is not always the best course of action. Because you never know if you’ll be able to have funds in your account on the specified future date. With pre-authorized debit, the beneficiary schedules regular withdrawals directly from your bank account. However, they all have clear rules and policies that apply to checks bearing a future date.
- While we know why businesses issue a post-dated cheque, it is also important to know the possible situations under which the post-dated cheque is issued.
- Suppose Jim has to pay a supplier INR 2,000 on 22d May for transactions he made 40 days ago.
- Now we know the definition of cheque, let’s understand post-dated cheque.
- He receives checks from some renters on the 28th or 29th of the month that are dated for the first of the next month.
- In writing a post-dated cheque, the only difference is that you will write a future date instead of the current date.
The last alternative to providing a post dated check is the good old hard cash payment. Most people now have access to their bank account online where they can process payments. 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. For example, if you want to pay your friend $100 only as of next week, you can write a post dated check for $100 bearing next week’s date. Let’s look at an example to see how post dated checks are used in practice. In the financial landscape, post-dated checks represent a unique facet of transactional convenience.
How Postdating Works
A payday borrower typically writes the lender a postdated personal check for the amount of the loan plus a fee. The lender cashes the borrower’s check on the agreed-upon date, usually on the borrower’s next payday. The encashment of a post-dated cheque before the stated date varies from country to country. In several countries, post-dated cheques can be presented for payment any time, while in some countries these cheques are not honoured until the date stated on the cheque.
(3) For the purpose of determining whether a post-dated instrument is a cheque, the fact that the instrument is post-dated shall be disregarded. (1) Where a cheque, or any indorsement of a cheque, is dated, the date shall, unless the contrary is proved, be presumed to be the day on which the cheque was drawn or the indorsement made, as the case may be. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.
Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. Voted the “Most Trusted Real Estate Brokerage Firm” in the Philippines, we are a group of dedicated real estate professionals, https://kelleysbookkeeping.com/ committed to providing you only the best real estate services in the country. As you can see in the image of a sample cheque above, several blanks need to be filled in before you send the cheque to be honoured by the bank.
Post-dated cheque validity
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. In the above example, if you are a recipient of the cheque, you can deposit the cheque on 3rd Feb or after that though the cheque was physically written and received to you on 27th Jan. (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. Under Australian law a post-dated cheque is valid under the Cheques and Payment Orders Act 1986.
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When you don’t have enough money on hand on the day the check is issued, but you know you’ll have it on the future date or deadline specified on the check, use posted dated checks. In india, a postdated cheque is valid for three months after the date on the cheque is indicated. 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.
Example of a Post Dated Check
However, there are instances that you can get in trouble for writing a worthless check. The person receiving your check will not be able to cash your check until the day that is indicated on the check. However, you know that next week, your employer will deposit your paycheck in your account for $1,500 (increasing your account balance to $1,800). For example, you may want to purchase something https://quick-bookkeeping.net/ for $500 but you only have $300 in your bank account. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.
Most bank services are now automated, and banks rarely verify the date on a cheque. The material provided on the Incorporated.Zone’s website is for general information purposes only. 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. In commercial transactions, banks are also given the right to process a check to the extent it is valid and correctly written.
The following question was submitted to John Roska, an attorney/writer whose weekly newspaper column, “The Law Q&A,” ran in the Champaign News Gazette. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years.
Although worthless check laws can vary somewhat from one state to another, all states make it illegal for a person to write a worthless check with the intent to defraud a person or business of goods or services. The maker of the postdated check must have the intent to defraud at the time of writing the postdated check. You’ll need https://business-accounting.net/ to check the specific laws for your respective state, but postdated checks are generally legal to write in the United States. Postdating a check may be considered illegal if the check writer’s account does not have the necessary funds to deposit the check, and if the writer’s intent was to defraud at the time of issuing the check.
Postdating a check refers to writing a check but putting a future date on the check instead of the date that the person writes the check. People typically postdate checks intending that the recipient not deposit or cash the check until a later date, because payment is not due until that later date. For example, someone might mail a check for a utility bill before payment is due, and put the bill’s due date (not the date the check is being written) on the check. The credit union I work for recently changed its funds acceptance policy to exclude accepting post-dated checks. Us folks on the front line have been instructed not to accept any checks for deposit or cash before the date printed or written on the check. This has caused a lot of issues for our members who receive their physical paychecks a day or two before the official payday.
