Month: October 2023

Before we understand the definition of post-dated cheque and why it is issued, let’s understand little more about the cheque. 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. If you are concerned about overdrafting — and you’d rather not deal with a returned check and your landlord’s ire — consider https://quick-bookkeeping.net/ switching to a bank with a solid overdraft policies. All of these charge lower than average overdraft fees and offer free ways to avoid that fee while still paying your bills. Our partners cannot pay us to guarantee favorable reviews of their products or services. If you want a basic checking account with no monthly maintenance fee, or an interest-earning checking account, we’ve got the options that are right for you.

In most cases, the recipient can deposit the check at any time, and the bank is free to pay funds out of your account before the date shown on your check. Under Georgia law, proof of any of the above-listed conditions will satisfy the intent element of the crime that is necessary for a conviction. https://bookkeeping-reviews.com/ Post-dated checks, with their deferred execution dates, offer a practical tool for managing financial transactions and agreements. As financial landscapes evolve, the judicious use of post-dated checks remains a valuable strategy for effective financial management and planning.

The explanation that we have received from management for this recent change is that accepting post-dated checks increases liability to credit union. When I raised this point with a supervisor, they said all banks and credit unions have policies about not accepting post-dated checks. These cheques bear a date in the past, on which the cheque is written, and so the bank is not obligated to honour such cheques.

Realistically, the recipient of a post dated check may never notice that the check has been post dated, and so will record and deposit it at once. The bank is also unlikely to notice the date on the check, and in any case may have a policy of honoring all checks at once, irrespective of the check date. In this situation, the check is considered a negotiable instrument, irrespective of the date, and it is likely that the recipient will receive cash from the bank prior to the date on the check. In such a situation, it is allowable for the check recipient to record a post dated check upon receipt of the check. Post dated cheques are ideal instruments when planned and used appropriately. They also help keep business activities running without shutting them down due to a lack of funds.

What is a Post Dated Check?

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. Now we know the definition of cheque, let’s understand post-dated cheque. 2) the reverse, in which a person is promised goods or services but does not receive them and has to stop the cheque.

• The easiest way to pay someone, instead of writing a post dated check, is to schedule a payment using your bank’s online bill payment service.
• However, the only aspect that is different between a check written for today and a post dated check is that the beneficiary will not be able to cash it until the date indicated on the check.
• A post-dated check is a check that is drawn on a date after the day the check was written, to put it simply.
• Cheques are one such instrument that can be used in multiple ways to make payments.

Banks have different policies for how long they will continue to monitor to prevent premature payment. Postdated checks are normal checks, but the person writing the check chooses to write a later date on it. Punishment for committing check fraud, including fraud committed with a postdated check, can vary from state to state, but the laws typically authorize fines, probation, and even imprisonment. A defendant also will have to make restitution to the victim for goods or services received with the bad check. The bank’s not responsible, since the law lets banks cash post-dated checks before the date on the check.

Terms and policies

We believe everyone should be able to make financial decisions with confidence. From the perspective of the payer, the best way to ensure that funds are not released early is to notify the bank not to release funds against this check any earlier than the date stated on the check. Stale Cheque refers to a cheque which is expired because it is held by the payee for too long.

Key Differences Between Stale Cheque and Post Dated Cheque

In writing a post-dated cheque, the only difference is that you will write a future date instead of the current date. Generally, if you write a cheque, you will write the current date of the cheque i.e., 27th Jan. But when you write a date which is later than the current date, say you write a date of a cheque as 3rd Feb, this is when it becomes 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. He suspects his tenants do this to keep him from cashing their rent checks before they’ve been paid, so their rent checks don’t bounce.

Virtually every adult today would have come across this instrument while either paying for rent in advance or while finalizing a business deal or home loan. Those who are into a business most certainly have come across this important financial instrument in the business world. Dishonoured cheques https://kelleysbookkeeping.com/ are punishable with up to a year in prison or the payment of a fine equivalent to twice the amount of the cheque under the terms of section 138 of the NI Act. Section 138 of the Negotiable Instruments Act makes bouncing or dishonoured cheques a criminal offence punishable by jail time or a fine.

How to Use Post-date Cheques?

In simpler terms, a cheque is written with a future date beyond the date on which it was written. In this case, the drawer should always maintain enough funds in the account so that the cheque doesn’t get dishonored/bounced on the specific date mentioned in the cheque. Post dated cheques are a great way to enjoy products and services before you actually pay for such services and products. It is also a quick way to continue business operations without having to stop for want of funds. Section 138 of the Negotiable Instruments Act applies to cheques and post-dated cheques alike. Under Section 138, Post-dated cheques should have an amount written with a future date for withdrawl.

If you have an option to exercise, then it is best to avoid writing a postdated cheque. Even if your payee (the recipient) is honest, they may make the honest mistake of forgetting and leaving you with bad cheque fee. To define post-dated cheque, it is a form of a cheque drawn with a future date written on it. To simply put, post-dated cheque is one which is drawn with a date which is after the date on which cheque was written.

Thus, the date on the check effectively postpones the underlying accounting transaction. This is especially useful if you have recurring bills to pay on a specific date monthly or quarterly or any regular period. Suppose a cheque issued on 4th April 2019 but the date mentioned on it is 19th April 2019. One can encash such a cheque, on or after 19th April 2019 and not before it.

Is it a crime to bounce post dated cheques?

In case of insufficient funds, the cheque might bounce when the recipient deposits it in the bank. This will not only result in additional fees from the bank but will also result in the loss of your reputation and the previously established relationship. When a banker pays a PDC cheque and then dishonours a cheque that was supposed to be paid, it will be returned to the owner because of a lack of funds.