Post-dated cheques, like normal cheques, have a validity of 3 months from the date of issuance. The national bank of India, RBI (Reserve Bank of India), has reduced the validity period of all cheques from the previous 6 months to 3 months, effective April 1, 2012. In the financial landscape, post-dated checks represent a unique facet of transactional convenience. Understanding the nuances of post-dated checks is essential for businesses and individuals alike. This blog post aims to shed light on what post-dated checks are, their applications, and the considerations involved in handling these financial instruments.
- A post dated check is a check on which the issuer has stated a date later than the current date.
- To add to it, each bank has different policies monitoring and preventing premature payment.
- “IRS employees are working hard to make sure that new funding is used to help taxpayers by making the process of preparing and filing taxes easier.”
- ABC should not record the cash receipt until May 15, nor should it reduce the related accounts receivable balance until May 15.
A cheque is defined as an instruction to the bank asking to pay a stated sum from the owner’s account to the cheque presenter or drawer. Cheques are written or printed in a specific format and in a form that is not easily replicable. It won’t be wrong to say that virtually everyone knows what a cheque is, except for millennials perhaps. It’s not their fault, though, as digital payments are the most popular method of payment in this age of technology due to which cheques are used quite less for a deposit or withdrawal of money. When you write a post dated check, your primary objective is to pay the beneficiary.
accounting basics
SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments. 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. However, it is illegal to write a check when you know you don’t have the funds to cover it, even if you hope to have the funds later.
- This influences which products we write about and where and how the product appears on a page.
- In writing a post-dated cheque, the only difference is that you will write a future date instead of the current date.
- They may not have access to credit cards, forcing them to use the services of a local or regional payday loan company.
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. Other states have laws that similarly allow a judge or jury to presume that the defendant had the intent to defraud with a worthless check if certain facts are proven. 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. In a worst-case scenario, writing postdated checks could lead to a criminal charge if you’re suspected of check fraud. The Uniform Commercial Code (UCC) enables lenders to loan money, secured by a borrower’s personal property. Adopted by nearly every state, the UCC is a standard set of business laws that was first published in 1952 to regulate financial contracts.
Proving Criminal Intent
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. 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.
How to Write a Postdated Check
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. For example, assume that today is January 1, and you’re what does the adverb modify adverb usage and examples 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. It’s risky to rely on postdating or processing delays to ensure your check clears.
Legal implications of dishonouring a post dated cheque
Banks and credit unions generally state rules about postdated checks in their account disclosures. Some of the biggest banks, for example, note specifically that they can honor checks that are made out for future dates. Many different factors can affect the timing of a refund after the IRS receives a return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills.
SoFi Checking and Savings
Financial instruments such as money orders and bank drafts cannot be postdated because you must pay for them up front. From the perspective of the check issuer, there should be no journal entry to record the reduction in cash until the date listed on the check. From the perspective of the recipient, there should be no entry to record the increase in cash until the date listed on the check. Thus, the date on the check effectively postpones the underlying accounting transaction.
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). A postdated check is one that is written with a future date indicated on it. For example, you may decide you would like to postdate a check if you are sending in a bill payment earlier than the due date. It is also common to postdate a check if there are insufficient funds in the checking account at the time the check is written.