Future Dating

What Is Future Dating?

Future dating is the scheduling of a banking transaction to occur at a later date. A payment is authorized to credit a bank account, with an agreement that the funds will not be transferred and made available to the recipient until a specified point in the future.

Understanding Future Dating

Future dating is done electronically, with the permission of the account holder. The individual or company legally responsible for all charges made to a credit or debit card account simply gives their account information to the depositing party. These details give the payer the right to deposit money and nothing more.

Future dating is commonly used with direct deposit from the account holder's employer. This practice is also frequently relied on to facilitate the payment of bills on schedule and has now become popular among government transactions as it saves both time and money for the receiving and depositing parties.

Example of Future Dating

Alex has a busy month ahead of them and is worried they may forget to pay their cell phone bill by the May 15 due date. They don't want to risk paying a penalty for late payment or having their service cut off, but they are also in no position to make the transfer immediately as their account currently doesn't contain sufficient funds.

There are usually set limits on how far in advance a future dated transaction can be set up.

Enter future dating. Alex's bank gives them the option to arrange the payment ahead of schedule. That means that Alex is able to set up the transfer on the first day of the month, safe in the knowledge that the money won't leave their account until the date he selected — in this case May 15.

Types of Future Dating

Future dating may be either recurrent or one-time.

Recurrent

In recurrent future dating, a date for a recurring payment is set, after which the payment is always made on that day until the account holder cancels or amends their instructions.

This path is often taken to manage repeat expenses, such as utility bills and workforce remuneration. As the payment is programmed to recur automatically, the account holder need not take any action, unless they wish to change the date of payment.

One-Time 

One-time future dating occurs when the account holder singles out a specific payment to be executed on a certain day. It may be a one-off transfer or it may be used to temporarily change the date of a recurring payment.

Because the transfer is only executed once, the account holder must take action to set the future date of payment.

Benefits of Future Dating

Individual consumers and companies use future dating to control cash flow by scheduling payments to occur when sufficient funds are present in the paying account. When a customer future-dates a payment, they give instructions to their bank to send the payment on a specific day.

This is different from post-dating a check because there is no obligation on the part of the recipient of a post-dated check to wait to cash the check until the date arrives. In other words, an account holder who writes a post-dated check risks having the check cashed immediately, leading to potential cash flow problems, including an account overdraft if there are insufficient funds in the account.

Future dating solves this problem by ensuring that the payment will be electronically transferred, or a check will be drafted, only when the specified day of transfer arrives.