Post-dated cheques in the UAE: how to account for them properly

Post-dated cheques (PDCs) are still part of everyday business in the UAE. Tenants pay a year’s rent in a bundle of cheques, customers pay on 30- or 60-day cheques, and suppliers expect yours. Handled loosely, they make your cash position look better than it is. Handled properly, they are one of the easiest things in the books to keep under control.

A cheque is not cash until it clears

When a customer hands you a cheque dated two months from now, two things are true at once:

• The customer has settled the invoice in the sense that you hold their promise to pay on a date.
• You do not have the money yet, and you may never get it if the cheque bounces.

Good bookkeeping records both. The invoice is marked as paid by cheque, and the cheque sits in a separate account, Cheques in hand (sometimes called PDCs receivable), until you deposit it and the bank clears it. Only then does it become part of your bank balance.

The same applies the other way round. A cheque you issue to a supplier settles the bill, but the money is still in your bank until the cheque is presented. It belongs in Cheques issued (PDCs payable) until it clears. If you count it as already gone, you understate your cash; if you forget it, you overspend.

The rule of thumb: your cash position should show cleared money only, with cheques in hand and cheques issued visible next to it, by due date.

The life of a received cheque

1. Received: recorded against the invoice; the cheque is in hand.
2. Due: on or after its date you take it to the bank, usually together with others on one deposit slip.
3. Deposited: the bank is collecting it.
4. Cleared: the money is in your account. The cheque leaves Cheques in hand.

Or, at any point after deposit:

• Bounced: the bank returns it unpaid. The invoice is open again, the customer owes you the amount (plus any bounce fee you charge under your contract), and the cheque comes back to you.
• Replaced: the customer gives you a new cheque or pays another way.
• Returned: you give an unused cheque back, for example when a lease ends early.

What the law says about bounced cheques (since 2022)

The rules changed on 2 January 2022, when amendments to the Commercial Transactions Law took effect. According to the Central Bank of the UAE:

• Issuing a cheque without sufficient funds is no longer a crime in most cases. Criminal liability remains for specific acts, such as closing the account or withdrawing the whole balance before the cheque is presented, telling the bank not to pay it without a legal reason, writing or signing it so that it cannot be cashed, and forging a cheque.
• A bounced cheque is now an “executive document”. When the bank certifies that the cheque was returned for insufficient funds, the holder can go directly to the execution judge to enforce payment, in full or in part, without first filing a police report or a court case.
• Banks must make partial payment. If the account holds less than the cheque amount, the bank pays what is available unless the holder refuses partial payment. The holder can then pursue the rest.

For a business, the practical lesson is to keep the bank’s return memo and the cheque safe: they are what you need to enforce payment. This is general information, not legal advice; speak to a lawyer about a specific case.

Running a cheque register

A good register answers four questions at any moment:

• What is due to be deposited this week?
• Which of our own cheques will be presented soon, and do we have the money?
• Which customers have bounced cheques before?
• Which invoices did a bounced cheque re-open?

Keep the register in your accounting system rather than a separate spreadsheet, so the cheques, the invoices and the bank stay in step.

How Sijilna’s cheque register works

With the post-dated cheque register add-on on the Plus and Premium plans (AED 49 a month), money in and out through a bank account can be paid by cheque:

• Recording: you record the cheque number, its date and the drawer’s bank (with an optional photo), or the payee for a cheque you issue. The invoice or bill is settled at once; the cheque goes to Cheques in hand or Cheques issued, and stays out of your cash position until it clears.
• Banking → Cheques: received and issued cheques with filters for “due within 3, 7 or 30 days” and “overdue to deposit”.
• Depositing: select several cheques, choose the bank account and date, and print a deposit slip. One entry is posted per deposit, so it matches the single line on your bank statement.
• Bounce, replace or return: one click each. A bounce re-opens the invoices it paid and can add your bounce fee. A customer with bounced cheques is flagged the next time you record a cheque from them.
• Printing: print cheques you issue on your bank’s cheque leaf, with a layout set up per bank account and a test print.
• Reminders: on your dashboard, “cheques to deposit” and “cheques due” for the days ahead you choose.

Landlords and property managers get the same register inside Sijilna for Property Management, with cheques collected at lease signing.

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