Cheques, Virtually every grown-up 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 fiscal instrument in the business world. It won’t be a mistake to say that virtually everyone knows what a cheque is, except for millennials perhaps. Digital payments are common, so cheques are used less. It’s not their fault.
A post-dated check( or post-dated cheque) is a check written with an unborn date. In other words, the date that shows the check is after the date when the check was written. Future date on check may not prevent early payment from bank account.
What’s a post-dated cheque?
To define a post-dated cheque is a form of a cheque drawn with a future date written on it. simply put, a post-dated cheque is drawn with a date that’s after the date on which the cheque was written. let’s take an example Assume that today is 27th Jan and you’re writing a cheque. Generally, if you write a cheque, you’ll write the current date of the cheque i.e., 27th Jan. Future date on a cheque is called a post-dated cheque, such as writing 3rd Feb in present.
This arrangement of issuing a post-dated cheque to the recipient( the person or business receiving the money, also known as the payee) is only made when the drawer wants the recipient to stay before depositing the cheque. Cheque presented to bank on or after written date, important to note.
How to write a post-dated cheque?
Writing a post-dated cheque is no different from writing a regular cheque. In writing a post-dated cheque, the only difference is that you’ll write a future date instead of the current date. The rest remains the same.
Why do we issue a post-dated cheque?
You need to write a communication to the recipient requesting their presence during the period between the issuance date and the date mentioned on the face of the post-dated cheque, if you are the drawer of the cheque.
If you’re a philanthropist of the cheque, you can deposit the cheque on 3rd Feb or after that, even though you physically received it on 27th Jan.The gap between 27th Jan and 3rd Feb is the delay time here.
Post-dated cheque situations:
Knowing the possible situations under which businesses issue a post-dated cheque is as important as understanding why they issue it.Insufficient funds You don’t have sufficient funds available on the date of writing the cheque, but you’re sure funds will be available on the future date or the date mentioned on the cheque.Writing a cheque in advance means writing a cheque for a commodity or service before it is due or completed.
Validity of a post-dated cheque:
Post-dated cheques, like normal cheques, have a validity of 3 months from the date of allocation. The national bank of India, RBI( Reserve Bank of India), has reduced the validity period of all cheques from the former 6 months to 3 months, effective April 1, 2012.
still, there’s a small technicality. In the date of issuance, we do count the 3 months instead of the number of days. Cheque valid from 01/01/21 to 31/03/21, regardless of days in between, for payment or issuance.
What are the alternatives for post-dated cheques?
However, also it’s best to avoid writing a post-dated cheque If you have an option to exercise. Indeed if your payee( the recipient) is honest, they may make the honest mistake of forgetting and leaving you with a bad cheque cost. People use a postdated cheque when they lack funds and cannot bear additional expenses.
still, say you’ll be out of the city and will be unable to pay when you generally do, schedule the payment through your bank’s online bill payment service similar to Net banking, If you’re postdating a check for timing or convenience reasons.,
Sign up for automatic electronic payments- only if you have faith in the payee. fraudulent or disorganized businesses may make withdrawals from your account before you’re ready.
Managing post-dated cheque:
Occasionally, the alternative doesn’t work, and you choose to issue post-dated cheque( s) assuming the finances will be available on a future date. To make the situation a little more interesting, you may have obtained the post-dated cheques promising to honour the payment on a given date. You might have reviewed this as well in issuing a post-dated cheque.
Now, you’re in a situation where you have one or further post-dated cheques received as well as an issue. This requires you to track and lead the post-dated cheques. Also, you need to have a special account treatment so that the deal will automatically affect the accounting books on the date of the post-dated cheque.One can mark an entry as post-dated and specify the date on which they received and issued the cheque.
The sale will automatically affect the account books on the date of the post-dated cheque. You can gain a comprehensive summary of all deals involving post-dated cheques, using the post-dated summary report You can include post-dated .deals in other account reports like bills and outstanding’s reports and accordingly make the opinions
Use cases of Post-dated cheques:
People generally issue post-dated cheques in one of the following cases.
still, you’re sure that your bank account will have enough finances at a future date mentioned on the post-dated cheque, If you don’t have enough finances presently in your account.I will clear the dues for the service provided or goods delivered after completion.
In similar cases, the final payment may be negotiable depending on the standard of service or product. fiscal institutions use Post dated cheques as a tool to ensure that borrowers don’t default on repayment of loans.
Legal matters concerning Post-dated cheques:
Section 138 of the Negotiable Instruments Act applies to cheques and post-dated cheques likewise. Under Section 138, Post-dated cheques should have a quantum written with a future date for withdrawal. Courts have rejected instant issuance of blank post-dated cheques because the cheques do not qualify as bills of exchange unless they state a specific amount on the cheque.
Section 138 of the Negotiable Instruments Act punishes the offence of bouncing or dishonouring a cheque with a jail term or fines, making it a felony.
Legal implications of dishonouring a post-dated cheque:
Under the provisions of the Negotiable Instruments Act, the legal penalty for the dishonour of a post-dated cheque is a Jail term not further than 1 yr. The issuer of a bounced or dishonored cheque must issue a legal notice within 30 days of the date of the dishonor as per the provisions of section 138 of the Negotiable Instruments Act. No response? File case in 45 days from legal notice.
Conclusion:
Post-dated cheques are a great way to enjoy products and services before you pay for similar services and products. It’s also a quick way to continue business operations without having to stop for want of finances. It also ensures the standard of the product or service.
FAQ & Related Questions :
1. What’s the discipline for the dishonour of cheques?
Dishonored cheques can result in jail time and a fine double the cheque value.
2. Which law governs the allocation of post-dated cheques?
Section 138 of the Negotiable Instruments Act holds legal standing in legal cases connected to post-dated cheques.
3. Is dishonouring post-dated cheques a felonious offence?
Committing dishonour of post-dated cheques is considered a felony offense in India.
4. What’s the validity of normal cheques?
Like post-dated cheques, normal cheques also have only 3 months of validity from the date of allocation.
5. What’s the validity of post-dated cheques?
Post-dated cheques now have a validity of only 3 months from the date of allocation.