Postdated Checks in Accounts Receivable

This document explains how postdated checks are used for payment.

A postdated check is a check with a date indicating when it may be deposited. Postdated checks are commonly used in Asia and the Gulf market. They are also quite common in the USA.

The purpose of a postdated check is to extend credit to the check writer. In that respect the postdated check is a promissory note, similar to a draft.

Using postdated checks is controlled by national laws and customs and company policy.


Debts are paid by deposit of a postdated check on or after a certain date.

Use the result to monitor the company's cash flow.

The following files are updated:

Checks of type 1 are saved with information category number 226, displaying all invoices connected to each check number. Value type 42 (customer risk not cancelled) is updated in 'Accounts Receivable. Display Balances' (ARS225).

Starting conditions

If the check is of type 2, the following values must be defined as well:

Basic Workflow

This basic workflow is very similar to the workflow for regular checks or drafts:

You as the Buyer

Basically, you can issue a postdated check whenever you wish to guarantee the seller that money for purchased goods or services will be available on and after a certain date in the future.

The advantages of using postdated checks are:

You as the Seller

Release the goods or perform the service in reliance of the check writer's promise to pay at some later date rather than in reliance of the check's negotiability.

The main advantages are:

The payment terms with the customer determine whether postdated checks should be accepted.

Use of Postdated Checks in the USA

Postdated checks are also used as a quite common payment method in the USA. There are, however, some statutes that prohibit or limit the use of such a check.

In most states, the rule is that a postdated check may be paid before its valid deposit date so long the check is otherwise properly payable. To prevent this from happening, the customer is required to give the bank a notice of the postdating in advance, describing the check with reasonable certainty. (The bank will charge a processing fee for identifying and postponing the cashing of the check.)

If the bank in spite of that would charge against the account of the customer, it is liable for any damages sustained by the check writer, including any damages incurred as a result of the dishonor of any subsequent checks.

One reason for this is that banks are processing large numbers of checks each day. For technical and human reasons, banks generally do not check the date on a check before they pay it.

Processing Postdated Checks in M3

M3 supports the processing of two types of postdated checks: Definite and preliminary.

For both types of checks, the date of the check is most likely identical to the due date of the original invoice. If not, the customer should be contacted and asked to send a new check or the due date of the invoice be revised. This facilitates the routines for customer debt management and credit monitoring.

Workflow in M3 – Outline
Related topics