Cheque follow-up: post-dated and bounced cheques

Two cheques that cause trouble

The post-dated cheque. A customer hands over a cheque dated the 25th and says, “It is paid.” Your staff mark the invoice as paid and stop calling. On the 25th the cheque is not deposited, or it is deposited and comes back. Meanwhile the invoice has fallen off everyone’s list.

The bounced cheque. The bank returns a cheque with a memo. The accounts person knows, but the sales person keeps telling the customer, “Thank you for the payment.” The invoice is unpaid, but nothing in the system says so.

Both problems have the same cause: the invoice status does not match the money in the bank.

How SmartWorker keeps them straight

• A post-dated cheque is noted against the invoice and counts as paid only on the cheque date. Until that date the invoice still shows in your outstanding.
• A bounced cheque makes the invoice due again. It returns to follow-up and the reminders start again, without anyone having to remember.
• Paid or cancelled invoices never get a reminder, so customers who have truly paid are not disturbed.
• If the customer promises to pay by a date, reminders pause until then, and the promise is kept in the history.

A note on the law

A bounced cheque can be a matter under section 138 of the Negotiable Instruments Act, 1881. The written demand notice must go within 30 days of the day you get the bank’s information that the cheque was returned. The customer then has 15 days to pay. Speak to your lawyer for the exact steps.

In your reports

Ageing (0-30, 31-60, 61-90 and 90+ days), who owes us and collections reports reflect the real position, because cheques are counted on their date and bounced cheques put the invoice back. You can open the reports by financial year or quarter and take them to Excel.