A post-dated check is a check bearing a date later than the day it was actually written or handed over, so the drawer is signaling that it should not be paid until that date arrives. The drawer is whoever writes and signs the check. Postdating is generally permitted, and on its own it does not stop the drawer’s bank from paying the item early.
The Date on the Instrument
The Uniform Commercial Code addresses the date directly. An instrument may be antedated or postdated, and except as provided in Section 4-401(c), an instrument payable on demand is not payable before the date of the instrument (UCC 3-113(a)). A check is a demand item, since “check” means a draft, other than a documentary draft, payable on demand and drawn on a bank (UCC 3-104(f)).
So the exception decides what actually happens at the bank, not the date on the face. Each state enacts its own version of the code, so the operative text is your client’s state law.
Can the Drawer’s Bank Pay It Before the Date?
Yes, unless the drawer tells the bank first. A bank may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty (UCC 4-401(c)).
That notice carries conditions. It is effective for the period the code gives stop-payment orders, six months, lapsing after 14 calendar days if the original order was oral and was not confirmed in a record within that period (UCC 4-403(b)). It also has to be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it before the earliest of the events Section 4-303 lists, among them the bank accepting or certifying the check, paying it in cash, or settling for it without a right to revoke the settlement (UCC 4-401(c), UCC 4-303(a)). The bank regulator describes it as a formal post-dating notice the customer submits to the bank, possibly for a fee (Office of the Comptroller of the Currency, HelpWithMyBank.gov).
Once that notice is in place the exposure reverses. If a bank charges the account before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act, and that loss may include damages for dishonor of subsequent items (UCC 4-401(c)).
What It Does to a Firm’s Books
Receiving one does not create cash. The item is not payable before its date, so nothing has been collected, and the invoice it came in against stays open, because taking an uncertified check for an obligation only suspends that obligation until the check is dishonored, paid, or certified (UCC 3-310(b)(1)). The canceled check entry works that ground through. The accounts receivable balance keeps aging from its original date, and a client who books the paper as a payment on receipt is reporting cash that has not arrived.
The drawer’s side is the mirror image. The date on the check is not a cash-timing control, because the account can be charged before that date arrives unless the notice went in. A cash forecast built on the written date is a forecast of what the drawer hopes will happen.
If the check reaches the bank early and the account is short, it comes back as an NSF check and the payee unwinds the deposit it already recorded. Either way the item tends to surface on the bank reconciliation.
Post-Dated Checks in Debt Collection
Federal law adds three limits, and they bind only a debt collector collecting a consumer debt, both terms as the Fair Debt Collection Practices Act defines them. The Act limits a debt to an obligation of a consumer arising out of a transaction in which the money, property, insurance, or services that are the subject of the transaction are primarily for personal, family, or household purposes (15 U.S.C. 1692a), so a receivable one business owes another sits outside it. Whether a given provider is a debt collector at all is a test worked through in accounts receivable outsourcing companies.
Accepting from any person a check or other payment instrument postdated by more than five days is a violation unless that person is notified in writing of the debt collector’s intent to deposit it not more than ten nor less than three business days before the deposit (15 U.S.C. 1692f(2)). Soliciting a postdated instrument for the purpose of threatening or instituting criminal prosecution is a separate violation (15 U.S.C. 1692f(3)), and so is depositing or threatening to deposit one prior to the date on it (15 U.S.C. 1692f(4)).
What It Is Not
A returned item for lack of funds is an NSF check, which fails on the balance in the account rather than on the date written on the face, and that entry also covers the stale-dated check, which fails the opposite way, on age rather than on earliness. A canceled check has already been paid and charged to the account, so it is finished rather than waiting, and that entry separates it in turn from a voided check, one marked so it would never be presented at all.
Common Questions
Generally, the law does not prohibit the use of postdated checks, absent any fraud (Legal Information Institute, Wex), and the code states plainly that an instrument may be antedated or postdated (UCC 3-113(a)). What federal law regulates is the use a debt collector makes of one.
The instrument is still a check, and the timing is only as reliable as the notice behind it, since without one the drawer’s bank may charge the account early (UCC 4-401(c)). For the payee, holding the item is not holding funds, so the receivable stays on the books until it is paid.
If post-dated items, returned checks and other close-day corrections keep landing on your reviewers, a trial task puts a block of your own work through Accountably’s review chain so your reviewer grades the output first.
