Outstanding Checks Report

Be mindful of post office conditions and potential delays for seasonality, weather, or staffing issues. Last, outstanding checks might have an impact on management of the cash flow. 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.

Checks that are outstanding for a long period of time are known as stale checks. In the U.S., outstanding checks are considered to be unclaimed property and the amounts must be turned over to the company’s respective state after several years. Therefore, rather than allowing checks to become stale and then remitting the amounts to a state government, companies should contact the payees of any checks that have been outstanding for several months. These are checks that were issued in the regular course of DuPage County business and have not been cashed by the payee.

What Are Some Best Practices for Managing and Clearing Outstanding Checks?

The payee’s bank will request money from your bank, and the transaction concludes when your bank sends funds to the payee’s bank. Alternatively, if you both use the same bank or credit union, the transaction will conclude when the money is transferred from your account into the payee’s account. An outstanding check remains a liability of the payer until such time as the payee presents the check for payment, which then eliminates the liability. Bouncing an outstanding check can lead to financial consequences, such as fees imposed by the bank, damage to your credit rating, and potential legal actions from the payee.

Using your outstanding deposits to balance the accounts, you can measure profitability and project cash flow. To keep your small business’s finances on track, reconcile your books and bank account statement. Sometimes, transactions are only recorded in one financial record when you reconcile the balances.

What Happens If a Check Is Outstanding for Too Long?

This won’t prevent banks from processing two deposits, but the document can provide a useful paper trail if you want to dispute one of the deposits. It may be necessary to issue a new check without getting the old check back if the original check was lost or destroyed. This presents a thorny situation—two checks might be circulating for a single payment. If the old check is deposited, your bank might honor it, and you could consequently end up paying double. It is imperative for an issuer to provide payees with timely communication regarding the issuance of a check as well as any pertinent details as soon as possible. This makes it easier to set expectations and gives them the opportunity to plan properly.

Businesses must track outstanding items to avoid breaking unclaimed property laws. If payments to employees or vendors remain uncashed, they eventually must turn over those assets to the state. This typically occurs after a few years, but timetables vary from state to state. When a business writes a check, it deducts the amount from the appropriate general ledger cash account. If the funds have not been withdrawn or cashed by the payee, the company’s bank account will be overstated and have a larger balance than the general ledger entry.

Example of an Outstanding Check in the Bank Reconciliation

Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. He is the sole author of all the materials on AccountingCoach.com.

After six months, all outstanding checks automatically become void. The Treasurer’s Office continues to hold the funds pending issuance of replacement checks. Best practices for managing and clearing outstanding checks include regular bank statement reconciliation, promptly voiding or canceling unused checks, and maintaining proper record-keeping. Also, always maintain in communication with payees about payments not fully processed. There’s always potential to make an error while doing your bookkeeping.

The payor must be sure to keep enough money in the account to cover the amount of the outstanding check until it is cashed, which could take weeks or sometimes even months. The payment goes on the general ledger, but businesses must make adjustments during reconciliation, and they may need to reissue stale checks. It’s important to keep track of the amount of checks outstanding because they could be cashed at anytime. You may have had even cash in the account when you wrote the check, but a month later your account might be lower. It’s important to keep enough money in your account to cover all the outstanding checks at all times.

To prevent problems, you should cash or deposit a check promptly after receiving it. This documentation will come in handy if you need to prove to state regulators that you made reasonable attempts to complete the payment. If an outstanding outstanding checks check is cashed after you asked a bank to stop the payment, you will be responsible for proving that you took the necessary steps to complete the payment. There are actually some benefits to have checks outstanding as well, though.

If you want a basic checking account with no monthly maintenance fee, or an interest-earning checking account, we’ve got the options that are right for you. Adjust your records by subtracting the outstanding deposit from your small business ledger. Fortunately, banks don’t have a legal obligation to honor checks written more than six months in the past. If the old check isn’t six months old, or if you want an extra layer of protection, two strategies can protect you.

• When a business writes a check, it deducts the amount from the appropriate general ledger cash account.
• Please note that even though checks presented below may have cleared subsequent to the month shown, they will remain on this list until the next month’s report is released.
• 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.
• Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized”).
• This presents a thorny situation—two checks might be circulating for a single payment.
• An outstanding check is a check that has been written by the company and send to a vendor, however, the vendor has not yet received or not yet deposited the check.
• Outstanding Checks are all un-cashed disbursements issued by the City over the past three years.
• If a check is destroyed or never deposited, the money remains in the payer’s account.

An overdraft occurs when the account holder who wrote a check that is still pending does not have enough money in their account to cover the amount of the check when it is eventually submitted for payment. If you don’t account for outstanding checks properly, then you risk spending the money for the check on something else. This could result in a “bounced check”, and you may be charged a “non-sufficient funds” (NSF) fee by your bank. It may also damage your relationship with the vendor or person you gave the check to.

Please note that even though checks presented below may have cleared subsequent to the month shown, they will remain on this list until the next month’s report is released. Outstanding checks and unclaimed property held by the City can be found below. To view property held by the State of Texas, visit the Office of the Texas Comptroller website. Individuals can reduce surprise withdrawals in personal accounts by using online bill payment instead of issuing paper checks. This process is part of the accounting cycle, allowing the company to accurately report cash, a current asset, on its balance sheet. The check may also be delayed if the issuing entity puts off mailing the check for any reason.