Finance & accounting
Managing post-dated checks (PDCs) from customers in the Philippines
How to receive, record, safekeep, deposit and monitor customer post-dated checks, handle bounced checks under BP 22, and keep PDCs in your cash forecast.
Post-dated checks (PDCs) are checks dated in the future that customers issue to cover installments, credit purchases or payment plans. They are common in Philippine B2B trade, distribution, real estate and equipment sales. A PDC is not cash until it clears, but it is a strong commitment, and a well-managed PDC register turns those checks into a reliable cash forecast.
The PDC lifecycle
- Receipt. Checks received from the customer are recorded immediately in a PDC register, with an acknowledgment issued to the customer.
- Validation. Payee name, amount in words and figures, date, signature and bank details are checked.
- Safekeeping. Checks are stored in a vault with limited access and logged custody.
- Deposit scheduling. Each check is deposited on or shortly after its date.
- Clearing. Cleared checks are applied to the customer's invoices.
- Exceptions. Bounced, replaced, held or returned checks are recorded with reasons.
What to record for each PDC
| Field | Why |
|---|---|
| Customer and invoice references | To apply payment correctly |
| Bank, branch and check number | To identify the check and detect duplicates |
| Check date and amount | For deposit schedule and forecast |
| Date received and received by | Custody trail |
| Status (on hand, deposited, cleared, bounced, replaced, returned) | Monitoring |
| Deposit date and bank account | Reconciliation |
Deposit discipline
Missed deposit dates are the most common PDC failure. A daily list of PDCs due for deposit, assigned to a responsible person, prevents it. Deposit promptly after the check date: under the Bouncing Checks Law (BP 22), presentment within 90 days from the check's date matters for the legal presumptions available to the payee if the check bounces, and checks are generally treated as stale after six months under banking practice.
When a check bounces
- Record the dishonor with the bank's reason (for example insufficient funds or account closed).
- Reverse the payment application so the invoice is open again.
- Notify the customer in writing of the dishonor promptly. Under BP 22, a written notice of dishonor matters: the drawer generally has five banking days from receipt of notice to pay or make arrangements before legal presumptions apply.
- Charge bank fees to the customer if your terms allow.
- Escalate according to your collections policy, including credit hold.
- Consult legal counsel before filing any case.
Replacing and pulling out checks
Customers sometimes ask to replace a PDC or delay a deposit. Treat these as exceptions with approval: record the request, the decision, the replacement check details and the return of the original check with acknowledgment. Never return a check without a record.
PDCs and cash flow forecasting
PDCs on hand are among the best data for a short-term cash forecast. Summarize them by week and month, apply a realistic expectation for bounces based on history, and include them in the treasury forecast. See cash flow visibility.
Controls checklist
- PDCs recorded on the day received, with acknowledgment to customer
- Vault access limited and logged
- Daily deposit list reviewed by a supervisor
- Person who holds checks is not the person who records collections
- Monthly count of PDCs on hand reconciled to the register
- Bounced checks reported to the collections owner the same day
Where Cirquolus fits
Cirquolus Accounts receivable handles post-dated checks together with sales invoices, counter receipts, payment entries, official receipts and customer aging. Financial management includes check monitoring and approvals. Related reading: accounts receivable management and collections process.
Frequently asked questions
What is a post-dated check?
A check dated in the future, which can only be deposited and paid on or after that date.
Can a post-dated check be deposited early?
Banks generally will not honor a check before its date. Deposit on or after the check date.
What should we do when a customer's check bounces?
Record the dishonor, reopen the invoice, send a written notice of dishonor promptly, apply your collection policy and consult legal counsel before taking legal action.
How long is a check valid?
Checks are generally considered stale after six months from their date. For BP 22 purposes, presentment within 90 days of the check date is significant.
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