Adresimiz: Muhammed Safitürk Blv. Bent Sitesi B Blok No:124 Batıkent / Ankara

Imagine you decide to rent an apartment at a cost of $1,000 per month as of June 1st. “It’s kind of a tricky scenario,” says Matt Foster, founder of the rental property search site iRent and a landlord in Ventura, California. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years.

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. Every jurisdiction and country may treat post dated checks differently. 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. It’s risky to rely on postdating or processing delays to ensure your check clears.

Hintz says that only criminal intent, such as intentionally not having enough money for a payment, can be grounds for check fraud. “From a criminal law perspective, there is nothing inherently illegal about postdating a check,” says Eric Hintz, a criminal defense attorney in Sacramento, California. Our partners cannot pay us to guarantee favorable reviews of their products or services. Most bank services are now automated, and banks rarely verify the date on a cheque. 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.

  • The person receiving your check will not be able to cash your check until the day that is indicated on the check.
  • Primarily, there three parties to a cheque, drawer – who draws the cheque on his bank account, payee – to whom the cheque is payable, i.e. the beneficiary, and drawee – the bank.
  • 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.
  • This is because there could be possibilities that you may not be able to honour the cheque on the given future date.

When it comes to post-dated checks, banks have procedures to ensure they are not processed too early. You can return the check and get your money back up to the day before the check’s expiration 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.

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, source documents definition it is allowable for the check recipient to record a post dated check upon receipt of the check. ABC International receives a $500 check payment from a customer for an unpaid invoice on April 30.

postdate a check meaning

Cheque refers to a bill of exchange, which contains an unconditional order to the bank to pay the specified sum from your bank account. There are two kinds of cheques which are commonly misunderstood are stale cheque and post-dated cheque. A stale cheque is one which cannot be honoured because the reasonable period is expired. As against, a post-dated cheque is a cheque which is drawn today but contains a future date for payment. 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.

It is also illegal to pretend to pay someone without actually intending to do so. For example, assume that today is January 1, and you’re writing a check. In general, you’d put the current date of January 1 on the check, but you could just as easily postdate it a week and write January 8 on the check, instead. Dishonoured cheques 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. Suppose a cheque issued on 4th April 2019 but the date mentioned on it is 19th April 2019.

  • However, please ensure that the cheque is made payable to the correct party and that the recipient’s name is written on it, i.e., the financial institution’s name.
  • You’ll need to check the specific laws for your respective state, but postdated checks are generally legal to write in the United States.
  • A post dated check is a check on which the issuer has stated a date later than the current date.
  • It is also illegal to pretend to pay someone without actually intending to do so.
  • Otherwise, your check will “bounce” and the landlord will receive an “NSF” or “Not Sufficient Funds” notice.

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. 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. Yes, dishonour of post-dated cheques is considered a criminal offence in India.

What’s the worst that can happen if I postdate a check and it gets cashed?

This way, your landlord will only be able to cash your post dated rent check when your rent becomes due. They may not have access to credit cards, forcing them to use the services of a local or regional payday loan company. To add further risk, payday loans can be rolled over for additional finance charges. Financial instruments such as money orders and bank drafts cannot be postdated because you must pay for them up front. For instance, someone with a car loan can schedule postdated payments to be transferred electronically from their account to the lender. If you are concerned about overdrafting — and you’d rather not deal with a returned check and your landlord’s ire — consider switching to a bank with a solid overdraft policies.

How Postdating Works

Luckily for them, Foster waits to cash postdated checks, but he isn’t legally obligated. In India, it is illegal to dishonour post dated cheques, which is a criminal offence. When Jim’s PDC cheques arrive on 4th June, the supplier must not debit cash or credit accounts receivables because the dates on the cheques state that the cheques cannot be encashed before those dates. This feature allows Jim to issue a cheque but has control over when the supplier gets paid. Post-dated cheque as the name implies is a cheque that carries a later date.

Difference Between Stale Cheque and Post-Dated 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. When you issue a post dated check, the bank will honor your check only if it is cashed at any time after the date appearing on the check (not before). In other words, a post dated check is a check that is validly written but can only be cashed as of the future date that you have indicated on the check.

The possible reason could be expected funds have not come into the bank. So, the story of the post-dated cheque is that you don’t have sufficient balance on the date the drawee demands the sum from you and you issue him a post-dated cheque with a future date. This is kind of giving assurance to the recipient or the drawee that on this future date, the payment will be honoured. Writing the post-dated cheque is no different from writing a regular or normal cheque. In writing a post-dated cheque, the only difference is that you will write a future date instead of the current date.

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. Depositing allows your bank to place a hold on the funds while the check clears, but cashing a check requires an immediate transaction. If you really want to cash a postdated check for the full amount, take it to the bank that issued the check (where the check writer has a checking account). Therefore, the issuance or acceptance of post dated cheques is avoided.

Thus, the date on the check effectively postpones the underlying accounting transaction. 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. This is typically done with the intention that the check recipient will not cash or deposit the check until the future indicated date. It is legal for an individual to postdate a check, as well as for a bank to cash or deposit it. In case of insufficient funds, the cheque might bounce when the recipient deposits it in the bank.

If the account does not have sufficient funds, the check might bounce, and you might have to pay insufficient funds or overdraft fees to your bank. You can try to get those fees reimbursed by the check writer, but collecting from somebody who’s already low on funds can be time-consuming, and if legal action is required, it could be expensive. In most cases, when you receive a postdated check, you can deposit or cash a postdated check at any time.

A post dated check is a check on which the issuer has stated a date later than the current date. It is used when the issuer wants to delay payment to the recipient, while the recipient may accept it simply because the check represents a firm date on which it will be able to deposit the check. This approach is used to improve the odds of being paid, especially when the issuer has little credit. The intent behind this dating arrangement is to force the payee to wait until the post date arrives before cashing the check. Second, the payer cannot be bothered with a series of check payments to the payee, and instead issues all of the checks at once, with each check post dated to a successively later date. For example, a tenant could write 12 checks to his landlord at the beginning of the lease year, with each one dated to cover the check payment for each successive month of the year.

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. However, a rejected payment (or an unexpected withdrawal from your checking account) can cause numerous problems. If you properly provided instructions to your bank and they pay funds from your account anyway, your bank should be required to cover any overdraft charges that result. You may have further recourse against your bank for any other expenses you face. In simple terms, a cheque is a type of bill of exchange that instructs the bank to transfer funds from one person’s account to the account of another person or company.

Leave a Comment

×
https://kozaveteriner.com/