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Post-dated cheques received or issued are either booked early, which distorts the bank balance, or forgotten, which causes missed deposits and stale instruments.
A post-dated cheque has no effect on the bank balance until its cheque date. Record it in the books on that date. It becomes a BRS reconciling item only if it is recorded but not yet cleared by the bank on the BRS date.
A PDC register with party, cheque number, bank, amount, cheque date, date banked and status, reviewed every week and at each month end.
Bank balances that exclude future-dated cheques, a clear list of cheques due for deposit, and no stale cheques discovered too late.
A post-dated cheque (PDC) is a cheque that carries a future date. Until that date arrives it is not money in your bank, so it stays out of the bank account in your books and out of your bank reconciliation statement (BRS). You record it on the cheque date, and it appears in a BRS only if it is still waiting to be credited when you prepare that statement.
Post-dated, undated or stale: what is the difference?
| Cheque type | What the date means | Do the books record it? | When can it appear in a BRS? |
|---|---|---|---|
| Post-dated | Date is in the future | Only from the cheque date | After the cheque date, if banked but not yet credited |
| Undated | No date written | Not until it is dated and banked | After it is recorded and while uncleared |
| Stale | More than three months have passed since the cheque date | It should be cancelled, not banked | Only as an old outstanding item that needs clearing out |
The three-month validity comes from a Reserve Bank of India instruction that took effect on 1 April 2012. Banks will not pay a cheque presented after that period.
What entry do you pass for a post-dated cheque?
Cheque you received from a customer. On the cheque date: Bank account Dr, Customer account Cr. Before that date, nothing goes into the ledger. The customer still owes you the money.
Cheque you issued to a supplier. On the cheque date: Supplier account Dr, Bank account Cr. Until then the supplier is still shown as payable.
Because nothing goes into the ledger early, you need a control so the cheque is not forgotten. That control is a PDC register: a simple list with the party, cheque number, drawee bank, amount, cheque date, date banked and status. Review it every week and at month end.
A worked example
On 14 October a customer, Shree Traders, hands you a cheque for ₹1,20,000 dated 10 November.
- 14 October: Enter it in the PDC register. No accounting entry.
- 31 October BRS: The cheque is not in the cash book and not in the bank statement. It is not a reconciling item. Your BRS ignores it.
- 10 November: Pass the entry: Bank Dr ₹1,20,000, Shree Traders Cr ₹1,20,000.
- 11 November: Deposit the cheque.
- 13 November: The bank credits ₹1,20,000.
If you prepared a BRS on 12 November, the ₹1,20,000 would sit under “cheques deposited but not yet credited”. By 13 November it clears and drops out. At the 30 November BRS it has no effect.
The common mistake is booking the ₹1,20,000 on 14 October. Your 31 October cash book would then show ₹1,20,000 more than the bank, and someone would waste time chasing a difference that is only a date.
What if the cheque is held back or the date passes?
Sometimes a customer asks you to hold a cheque because funds are not ready. Note this in the register and do not deposit it. If you deposit it and it bounces, you will need to reverse the entry and you may pay a return charge. See how to handle a cheque that bounced in the books.
Watch the three-month limit. If the cheque date was 10 November, the cheque is valid until 10 February. After that it is stale. Do not bank it. Ask the customer for a fresh cheque or another payment method, cancel the old cheque in the register and return it or record its destruction.
If you issued a cheque that the supplier never presented and three months have passed, it stays in your BRS as an outstanding cheque. You should then reverse it in the books (Bank Dr, Supplier Cr) so the supplier is shown as payable again. The stale cheque guide explains this step.
Why does this matter at month end?
Post-dated cheques are easy to lose sight of because they are not in any ledger. A business that takes PDCs from many customers, such as a distributor or a landlord collecting rent, can have dozens of them in a drawer. Checking the PDC register is one line on a good month-end close list: which cheques fell due this month, were all of them banked, and has any crossed the three-month limit?
What to read next
- Next step: the month-end close reconciliation checklist
- How do I handle a cheque that bounced in the books?
- Bank reconciliation software for Indian businesses
When cheques are only a part of a busy account, TransactIG matches bank statement lines to your books and puts anything unmatched, such as a cheque you expected but the bank never credited, into an exception queue with audit-ready exports.