Register the details of a postdated check that you issue to a vendor.When the payment is posted, the vendor liability is recognized, but the bank account isn’t yet credit.
There are several advantages to taking postdated checks in settlement of an account balance including these: 1.
The fact that you are holding a check that will be presented to the bank for payment on a specific date places a burden on the debtor to have funds on deposit when the check is presented. In the event that the check is dishonored and the customer is sued, the existence of the check makes it harder for the customer to argue that the debt was never owed. Even if a post dated check is not honored when it is first presented, there is always the possibility that the check will clear at its second presentment, or that the creditor can tender the check to the debtor's bank on a collection basis.
There is a down side to accepting post dated checks...
If a creditor accepts a post-dated check in exchange for merchandise or services, in many jurisdictions the seller is considered to have extended credit to the issuer of that check.
Therefore, the check can't be cashed until the specified date.
Microsoft Dynamics 365 for Finance and Operations supports the full management cycle for postdated checks in both Accounts receivable and Accounts payable, as shown in the following table.
Can a bank cash a check if you have postdated it for after payday?
If your holiday bills are coming due and you don’t yet have enough money to cover them, some collection agencies will tell you just to postdate the check until after pay day. Many people are under the misconception that a bank can’t cash a check until after the date for which it’s dated.
When you register the check details, provide a reference to the original check, and indicate that the new check is a replacement for the original. Settle a postdated check that is posted to a bridging account for a customer or a vendor when the check finally matures.
When the check is settled, the bank is finally debit or credit against the clearing account that was used earlier.
You can stop payment on a postdated check that was issued to a vendor, for reasons such as not sufficient funds, changes in the terms of the agreement with the vendor, supply of defective goods by the vendor, or return of goods to the vendor.