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Everything about Post Dated Cheques in the UAE! Read Now.

The most popular form of payment that banks issue is a Cheque in the UAE. It is a practical payment method that is still well liked in the digital age. The way a cheque works is simple, the account holder issues a properly filled out cheque to the bearer, who can either cash it or deposit it in a bank, where the money is credited to the account. Some of the most well known phrases related to checks include "canceling cheques," "paycheck validity," "bouncing cheques," "post dated cheques," and others.

Thus in today’s blog, Dhanguard will extensively discuss the concept of Post Dated Cheques in the UAE. So without any further ado, let’s learn! 

Along with a wide array of services provided, Dhanguard also helps with Mainland, Offshore and  Business Account opening as well.

What is a Post Dated Cheque?

A cheque just has a few fields, including Name, Amount, Date, and Signature. Every field on a check is significant and needs to be filled in with attention. A cheque is referred to as a post dated cheque if the date is in the future (PDC Cheque). This indicates that the cheque could only be cashed as of the date shown on the cheque.

Let us explain with the help of the following example; if the date on the cheque is 26.05.2022 and the current date is 01.03.2022, the cheque can only be paid on or after that date. These kinds of Cheques are referred to as Post dated cheques. 

 

Read More: Want to make Risk Free Investments? Read about these 4 Safest Investment Options in UAE.

How can I write a Post Dated Cheques in the United Arab Emirates?

Writing a post dated cheque is the same as writing a standard cheque. 

  • You must include the bearer's name (the person to whom the cheque is given), the cheque’s amount, and AC Payee in the upper left corner if the money to be credited to the bearer's account.

  • The Date is the most significant and unique element on a Post Dated Cheque. 

  • Mention a future date on which your cheque can be cashed. 

  • Finally, double check the information provided before signing the cheque to avoid it from becoming a bounced cheque, dishonored cheque etc.

What is the Validity of a Post Dated Cheque in the UAE?

In the United Arab Emirates, a cheque is valid for six months from the date that is written on it. A post dated cheque is also subject to the same rules 

Important Directives regarding Post Dated Cheques in the UAE

Below mentioned are the important directives regarding the Post Dated Cheques in the UAE which you should be aware of-

No written contract exists

The payee may present the cheque at any time until the payer notifies the bank that the checks cannot be cashed prior to the specified date. The payee may deliver the cheque at any time, and if the payer has not given the bank any instructions, the bank is compelled to honor the cheque. This implies the bank is free to pay the payee in cash even before the scheduled date.

Fraud is not accepted

Although there is no law against the use of post dated cheques, it is unlawful to issue a check if the payer does not have enough money to cover the cheque's declared amount.

Make sure by checking with your bank

A cheque with an upcoming date is not guaranteed in any way. The bank will give us instructions on how to accomplish this in writing if they receive any written instructions. A fee must be paid by the user for this monitoring, and different banks have varied regulations for how long they will track to avoid early payments.

Instances where a Post Dated Cheque can come in Handy

Even though the phrase "Post Dated Cheque" itself illustrates the reason, the instances in which it may be utilized are:

  • If you don't have enough money in your account, you can write a cheque for the amount you will have by a specific date in the future.

  • A post dated cheque might be given to someone if you want to pay them before the due date.

Is Issuing a Post Dated Cheque Secure in the UAE?

  1. Post dated cheques are given to banks or other financial institutions in addition to the usual payments as a requirement of the loan agreement. 

  2. Banks deposit the cheques to encash them when a borrower misses loan payments over an extended period of time. 

  3. In the event that there are funds in the account, the bank or financial institution will cash it; otherwise, the account holder will be charged with a cheque bounced case.

  4. It is on to the account holder to keep PDC cheques secure. 

  5. The account must have money available at the moment of withdrawal, regardless of whether the cheque is payable to a person or a financial institution. 

  6. Otherwise, the account holder will be subject to legal cheque bouncing penalties in the UAE.

What are the Benefits of a Post Dated Cheque?

The benefits of post dated cheque are enumerated below-

  • The payer is not compelled to make a single, lump sum payment or to make a payment within the predetermined time frame; instead, it operates as an installment payment system.

  • The payer is given the option to postpone future payments, which helps him make up for his financial shortfall.

  • Even if the owner is unable to pay suppliers because of a lack of funds, it makes it possible for a business to continue operating normally.

  • The guarantee that the transaction will happen at some point in the future is beneficial to both parties.

  • Cheques that have been postdated can be your best friend or worst adversary. The ability to establish strong and lasting business ties is one possible advantage of this payment method. 

  • A solid financial future can be ensured when a supplier can be relied upon and post dated cheques can be used to pay with complete assurance that the transaction will be honored.

Conclusion

Account holders in the United Arab Emirates have access to a fantastic method known as a post dated Cheque. This guarantees that they won't skip any upcoming payments. The account holder must ensure that there are funds in the account at the moment of withdrawal in order to prevent issues. We therefore hope that this blog gives you useful knowledge. Please feel free to visit our headquarters or our website for further details on other related topics.

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Frequently Asked Questions

Yes, a foreign entity can open business account in the UAE. The registration of any organisation in the UAE is generally an easier and cost-effective way.

The requirement for opening any bank account in the UAE vary from one bank to another. Although, the existence of a major director or shareholder is generally required.

A limited company should have a dedicated bank account because they have a separate legal entity.

The benefits of having business account includes tracking of the expenses, easy calculation of the tax liabilities as well as management of cash flow.

Yes you can open a business account in various major currencies of the world other than the UAE dirhams.

Every bank has a unique internal procedure and timetable for opening accounts. For an LLC or a Free Zone company, obtaining a bank account in the UAE normally takes 2 to 4 weeks.

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