When you receive a check and do not cash it right away, the check is outstanding. Outstanding Checks are all un-cashed disbursements issued by the City over the past three years. Items more than three (3) years old as of March 1st are moved to the City's unclaimed property account by July 1st of each year.

The payor is the entity who writes the check, while the payee is the person or institution to whom it is written. An outstanding check also refers to a check that has been presented to the bank but is still in the bank’s check-clearing cycle. If a check was issued to you and it’s still outstanding after six months, contact the check issuer and request a replacement. As mentioned above, you may need to return the original check or sign documents confirming the check is lost or destroyed. If you cannot find the issuer, consult your state’s abandoned property program to claim assets. If you write a check and the money never leaves your account, you may develop the false belief you can spend those funds, but the money still belongs to the payee.

Uncashed Checks

Furthermore, checks that are never cashed may constitute "unclaimed property" that is turned over to the state. Outstanding checks that remain so for a long period of time are known as stale checks. Balancing your checkbook is akin to what professional accountants do during reconciliation.

Online payments offer a more direct way of transferring the funds between you and the payee. Make sure that payees have access to the right contact information so that they can get in touch with you or your designated representative regarding any questions, issues, or changes relating to the overdue check. Check to see that the contact information is correct, as checks may go missing simply because of an incorrect mailing address. Need a simple way to record your business’s income and expenses?

How Outstanding Checks Work

Writing checks makes it possible for organizations and individuals to make payments without requiring instantaneous cash or electronic transactions to be completed. Checks that linger only buy the company more time to gather up enough resources for payment to clear if more time is needed. Outstanding checks also have the risk of being used in fraudulent conduct. Someone else could be able to change the payee name or the amount if a check is misplaced or stolen before it is taken to the bank.

There is a discrepancy between what your checkbook or accounting system says you have in your account and what the bank reports on your monthly statement. One of the main differences are the outstanding checks that have been recorded in the accounting system but haven’t been recorded by the bank. The term outstanding checks refers to those checks that have been recorded by a company as being written, but not yet cleared and posted to the account's statement by the company's bank. Outstanding checks are typically identified as part of the bank account reconciliation process.

Should You Write Another Check?

As a small business owner, you are in charge of making sure you close your books correctly. Knowing your outstanding deposits allows you to maintain correct financial records. Reconciling your bank account helps you avoid accounting issues. An outstanding checks outstanding deposit is a receipt shown in your accounting books but not on your bank statement. Receipts include money you’ve received, such as cash and checks. When you write a check to vendor, the bank has no idea the check has been written.

• If a corporation has a substantial number of checks that have not yet been cashed, it may create ambiguity over the amount of cash that is available, making it difficult to efficiently plan for and manage expenses.
• When you write a personal check, you should record the date, check number, payee, and amount in your check register.
• When you write a check to vendor, the bank has no idea the check has been written.
• Professional accountants and bookkeepers deal with outstanding checks during reconciliation, a time where they are balancing their ledgers as they approach closing the books for the month.
• An outstanding check represents a check that hasn’t been cashed or deposited by the recipient or payee.
• The payor is the entity who writes the check, while the payee is the person or institution to whom it is written.
• Sometimes, items are recorded on one financial record but not the other.

An outstanding check represents a check that hasn’t been cashed or deposited by the recipient or payee. One state is that the payee has the check but hasn’t deposited or cashed it. The other state is that the check has not yet reached the recipient and is still in the payor’s bank-clearing cycle.An outstanding check is a liability for the person (i.e., payor) who has written the check. They must make sure that enough money remains in their checking account to cover the check until it is paid.

Related Content

Huntington explains how you can add a person to your account at any time or open a joint bank account together. If the outstanding check has expired, you may want to write another check; however, it’s possible that this check will go stale, too, and that would prolong the situation. When you ask them how they want to be paid, try suggesting a money order, cashier’s check, or cash.

In that case, you must adjust your books to match the bank statement balance. The State of Delaware’s unclaimed property reporting period is on a calendar year cycle (January 1st – December 31st). If outstanding checks reach 5 years of dormancy during the calendar year, the unclaimed property report and related payment are due by March 1st of the following calendar year.

If that doesn’t work, send a letter informing payees the check has not been presented and officially request they notify you if they have not received the payment. If a payee receives a check and does not present it for payment at once, there is a risk that the payer will close the bank account on which the check was drawn. If so, the payee will need to receive a replacement payment from the payer. If a check remains outstanding for an extended period, it may become stale-dated, and the bank may refuse to honor it. The payee should contact the issuer to request a new check if this occurs.

• If you don’t account for outstanding checks properly, then you risk spending the money for the check on something else.
• Once such checks are finally deposited, they can cause accounting problems.
• This makes it easier to set expectations and gives them the opportunity to plan properly.
• Some checks become stale if dated after 60 or 90 days, while others become void after six months.

You can ask if they’re willing to deduct the stop payment fee from the original amount. If the outstanding check is less than six months old, you should not write another check. The original check is still valid, and the payee can cash or deposit it. It’s fine to contact the recipient after a few weeks to find out if they’ve lost the check or when they plan on cashing it. If they can’t get to the bank, you may want to ask them to return the check to you and you can pay them using another method. Professional accountants and bookkeepers deal with outstanding checks during reconciliation, a time where they are balancing their ledgers as they approach closing the books for the month.

Reports

Businesses that mishandle these kinds of accounting situations are effectively in violation of the law. Our review course offers a CPA study guide for each section but unlike other textbooks, ours comes in a visual format. Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized”). Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings").