What it means
When someone post-dates a cheque, they sign it today but write a future date on it. The person receiving it is supposed to wait until that date before paying it into the bank.
It lets the payer promise money now while keeping the cash in the account until the later date. The practice is common in rent, instalment loans and supplier payments in some regions.
A tenant may hand over twelve cheques at the start of a lease, each dated for a different month. The landlord gains a fixed schedule of payments, and the tenant avoids having to remember each due date.
Businesses also post-date invoices and contracts. An invoice dated for the first day of next month can match a customer's payment cycle, and a contract can be dated to start when a project begins.
Used honestly, the later date reflects when an obligation really starts. There are risks.
A post-dated cheque is not guaranteed funds, so it can bounce if the account is empty on the due date, and in some countries banks may pay a post-dated cheque early unless the payer gives a stop instruction. Rules differ by jurisdiction, and in some places post-dated cheques have special legal treatment, so businesses should check local law.
Post-dating should never be used to hide something. Dating a document later than its real date to mislead an auditor or tax authority, or backdating (the reverse, dating it earlier), can amount to fraud.
The accounting rule is to record a transaction in the period when it actually happens, whatever date is printed on the paper. In accounting terms, the date printed does not change when the transaction is recorded.
A cheque handed over today for goods received today creates a liability today, even though the cash leaves the account later. Finance teams usually track post-dated cheques in a separate schedule so that the cash forecast shows the right amount on the right day.
In practice
Real-world examples.
Example
A tenant signs a one-year lease for a flat and gives the landlord four post-dated cheques, one for each quarter at $4,500. The landlord deposits each cheque on its printed date, receiving $18,000 across the year.
Example
A small furniture maker buys timber from a supplier and hands over a cheque for $11,000 dated 30 days ahead. The supplier agrees because it lets the maker pay after selling the furniture.
Example
A consulting firm signs a contract in December but post-dates the agreement to 1 January so that the work and the fees fall into the new financial year. The dates match when the work really begins, so the treatment is honest. The firm writes the start date into the contract and records fees only from that date onwards.
Case study
Seen in the real world.
Oakridge Interiors is a fictional design company that agreed to buy $24,000 of fixtures on credit. The supplier, wary of late payment, asked for three post-dated cheques of $8,000 for 30, 60 and 90 days ahead.
The finance manager recorded the purchase immediately as a liability, because the goods had been received, and diarised each cheque date so the account would hold enough cash. In this illustrative case, one cheque was nearly missed when a customer paid late, but the manager moved funds across in time and learned to build a cash forecast around the dates on the cheques. The supplier was paid in full and on time, and later offered a small discount on the next order because the arrangement had run smoothly.
The experience led the company to adopt a simple register of every post-dated payment it had issued or received, showing the amount, the printed date, the counterparty and the bank account affected. The register was checked each Monday against the cash forecast. When a customer later sent a post-dated cheque of its own for $5,000, the team knew to hold it unbanked until the right day and to flag any risk that the customer's account might be short.
Watch out
Common mistakes.
- Assuming a post-dated cheque is safe from being paid early, when a bank may honour it if the payer has not stopped it.
- Forgetting that the money must be available on the printed date, since the cheque can bounce.
- Recording a transaction in the books on the date printed on the paper instead of when it really occurred.
Questions
People also ask.
Is post-dating illegal?
Not in itself in many places, but rules vary, and using a false date to deceive someone is a different matter.
What is the difference between post-dating and backdating?
Post-dating uses a date later than the real one, while backdating uses an earlier date, which is more often a red flag.
Can I stop a post-dated cheque?
Usually yes, by giving the bank a written stop instruction before it is paid, though the bank may charge a fee and the payee may have other legal remedies.
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