Definition
What is Post-dating?
Post-dating refers to the practice of writing a future date on a financial document, such as a cheque, instead of the date on which it is actually signed or issued. This makes the document effective or negotiable only from the specified future date.
For instance, if you sign a cheque on January 1, 2023, but write January 10, 2023, as the date, the cheque cannot be cashed or negotiated until January 10, 2023.
Examples
- Post-dated Cheque: If you owe a monthly rent payment due on the 15th of each month but write and sign the cheque on the 1st of the month dated for the 15th.
- Promissory Note: An agreement to pay a debt where the effective date for repayment is set in the future. The debtor signs the note today but dates it for when the obligation officially begins.
- Contractual Effective Date: When signing a business contract, the terms might include a clause that makes the agreement effective from a future date that is not necessarily the signing date.
Frequently Asked Questions (FAQs)
Why would someone post-date a cheque?
Post-dating a cheque ensures that the payer has sufficient funds in their bank account by the time the cheque is due to be cashed, and it aligns the payment with a specific date related to a contractual obligation or installment.
Is a post-dated cheque legally enforceable?
While the legal enforceability of post-dated cheques varies by jurisdiction, they generally become valid on the date specified. Bank policies will often defer to the date written on the cheque for payment processing.
Can a post-dated cheque be cashed before the date on it?
No, a financial institution typically will not cash or negotiate a post-dated cheque before the specified date. Attempting to do so can result in a returned cheque and associated fees.
Is it illegal to post-date a cheque?
Post-dating a cheque is not illegal, but it must be done with clear understanding and communication between parties involved. Misuse or fraudulent post-dating is illegal.
Are there fees for post-dating a cheque?
Banks may charge fees for handling post-dated cheques, especially if they incur any processing complications. Reviewing the bank’s policy regarding post-dated cheques can help avoid unexpected charges.
Related Terms
Antedate
Antedate refers to the practice of inserting a date on a document that is earlier than the actual date it was signed. This often has implications for deadlines, reporting, and legal requirements.
Non-Sufficient Funds (NSF)
NSF occurs when a bank account does not have enough money to cover a cheque that has been presented for payment. Post-dating a cheque can help prevent NSF fees by ensuring funds are available by the specified date.
Payee
The payee is the individual or entity to whom a cheque is written and who is authorized to receive the funds once the cheque is processed.
Negotiable Instrument
A negotiable instrument is a document guaranteeing the payment of a specific sum of money, either on-demand or at a set time, with the payer generally named on the document.
Online References
Suggested Books for Further Studies
- “Intermediate Accounting” by Kieso, Weygandt, and Warfield – This comprehensive accounting textbook covers many aspects of cheque writing and other financial instruments in detail.
- “Fundamentals of Accounting” by Phillips, Libby, and Libby – Offers a robust introduction to accounting principles, including the handling of post-dated and other types of cheques.
- “Financial Accounting and Reporting” by Barry Elliott and Jamie Elliott – A detailed guide for understanding financial documents and their implications for accounting practices.
Accounting Basics: “Post-date” Fundamentals Quiz
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