Trading businesses hold stacks of post-dated cheques — against a supply, against a running account, against an agreement nobody wrote down. The stack feels like money. It is not money, and the distance between those two things is where a lot of cash-flow surprises come from.
A cheque is a promise with a date on it
Until it clears, three separate things can go wrong: it can bounce, it can be stopped, or it can simply sit past its date because nobody took it to the bank. None of those are exotic. All of them are invisible if the cheque was recorded as a receipt on the day it was handed over.
The mistake that looks like good bookkeeping
Marking the invoice paid when the cheque arrives. It closes the row, it clears the outstanding list, and it feels tidy. What it actually does is move money into your books that is not in your bank, so every figure downstream — what customers owe, what you have collected, what the month looks like — is now optimistic by the size of the stack.
Counting promises as collections is the specific habit that causes it, and it is easy to do because most software offers exactly one button: mark as paid.
What should happen instead
Two separate events, recorded separately.
- The cheque is received. Record the cheque — who gave it, for which bill, the amount, the date written on it, the bank. Nothing in the ledger moves.
- The cheque clears. Only now is a payment recorded against the invoice, and only now does the outstanding balance change.
In BizGST Pro that is enforced rather than left to discipline: nothing touches the ledger until a cheque is marked cleared. When it is, the payment is recorded then, on that date.
The two questions a cheque list has to answer
Neither of which an invoice list can answer, which is why the cheques need their own screen.
**What clears this week.** This is your near-term cash position, and it is the number that decides whether you can pay a supplier on Friday. It is not the same as what customers owe you — most of that is not dated.
**What has gone past its date and has not been banked.** This is the quiet one. A cheque dated the 4th that nobody deposited is not a payment problem, it is an attention problem, and it gets worse the longer it sits. It will never appear on an ageing report, because as far as the invoice is concerned nothing has happened.
Cheques you have issued, too
The same logic runs the other way. A post-dated cheque you have given a supplier is a commitment against a future bank balance, and it is the reason an account that looks comfortable on Monday can be short on Thursday. Knowing what leaves and when is half of knowing what you actually have.
The habit worth building
Look at the cheque list on a fixed day each week, before you look at anything else. Bank what is due, chase what bounced, and note what has aged past its date. It is a five-line list for most businesses, and it is the closest thing to a real cash forecast that a small business can keep without effort.
What this article does not cover
Anything about the legal position of a dishonoured cheque, notice periods, or what recourse exists. That is set by law, it changes, and the source is your lawyer or your accountant — not a software blog. What is above is about your own books telling you the truth.