Outstanding Checks Definition

outstanding checks

Another example is a payroll check, or paycheck, which an employer issues to compensate an employee for their work. In recent years physical paychecks have given way to direct deposit systems and other forms of electronic transfer. A series of coded numbers are found along the bottom edge of the check, directly underneath the memo line and the payor’s signature line. These numbers represent the bank’s routing number, the payor’s account number, and the check number. They may require another check after speaking with your payee.


The management had already allowed the payment, though not yet deducted from the bank balance. When that filing date arrives, the firm sends the payment to the government, along with a form that itemizes all of the outstanding checks being forwarded to it. When there are old outstanding checks on a bank reconciliation, they should be eliminated. The first step in doing so is to contact the payee, to see if the check was lost. If so, cancel the original check, reverse the payment transaction in the accounting records, and send them a replacement check.

How Long Does It Take to Get an Outstanding Check?

Outstanding Checksmeans all checks, electronic payments or debits of any kind issued or authorized by the U.S. Or the Seller Foreign Subsidiaries prior to the Effective Time, but not yet debited from their respective bank accounts as of the Effective Time. Be proactive when writing checks and make sure to call or write if the payee doesn’t deposit the check. Send a letter informing the payees that the check has not been presented and request an official notification to make sure your check hasn’t gotten lost.


The definition of an outstanding check is a check that has been written, but it hasn’t been cashed-deposited by the bank, or otherwise cleared the bank. Sometimes a payee forgets about the check or loses it without notifying the payor. The payor has no control over when the payee will cash or deposit the check. The only thing the payor can do, for a fee, is stop payment on the check. The payee cannot cash or deposit the check once a stop payment has been issued. If you received a check and it is still outstanding after six months, contact the check issuer and ask for a replacement.

Identifying Uncashed Checks

Many businesses use direct deposit, a type of online bill payment, to avoid having to deal with outstanding checks. An outstanding check is a check payment that the issuing entity has recorded but has not yet cleared its bank account as a debit from its cash balance. The outstanding check is used to derive the monthly bank reconciliation.

  • All checks that have not yet cleared in the bank are listed in the report.
  • This may give the impression that there is more money accessible to spend in the account than there should be.
  • In addition, the bank could file a lawsuit because of forgery.
  • This can complicate things such as creating an inflated account balance, unclaimed assets and business.
  • You can also send a letter informing the payees that the check has not been presented and request an official notification to make sure your check hasn’t gotten lost.

If the amount is large enough to cause problems, or if you’re dubious of the payee, considerasking your bank to stop paymenton the old check. A check of $520 deposited by the company has been charged back as NSF. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. Contact the recipient of the check and find out how they want to handle it. Inform them that you put a stop payment on the check you gave them.

Write Another Check

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. The necessary first step in keeping track of checks your company has written is reconciling your checkbook. These days, the reconciliation is more likely to take place in QuickBooks or another digital accounting program.

  • For instance, the outstanding checks includes stale checks.
  • Verify with the bank that they will not honor a check that’s older than 6 months.
  • Second, outstanding checks were cleared in the bank, but for some unknown causes, a bank made several errors.
  • Be proactive when writing checks and make sure to call or write if the payee doesn’t deposit the check.
  • Personal, business, and payroll checks are good for 6 months .

If you operate a business, be sure to check with state and industry regulators to verify the requirements that apply to your check. You may have to include certain language or follow other rules related to unclaimed property. Outstanding checks that remain so for a long period of time are known as stale checks. An outstanding check is still a liability for the payor who issued the check. Checks that are outstanding for a long period of time are known as stale checks. Contact the recipient of the check and ask if they lost the check or when they plan on cashing it.

These generally do not appear on the monthly bank statement because they haven’t been paid from the account as of the statement date. Stale checks are often listed in the bank reconciliation statement as part of its accounting. For instance, the outstanding checks includes stale checks. All checks that have not yet cleared in the bank are listed in the report.

This post interest is in the current assets only because it includes the cash balance which relates to outstanding checks. 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.

Of course, it’s best practice to deposit a check as soon as you receive it, which is why most checks include language encouraging a timely deposit. This language may include phrases like “valid for 90 days”. When getting started with subsidiary ledgers, it is important to understand why they are used in accounting. First of all, there is no point in spending time working on something that is not yet…

Approved checks but still unreleased to payees

outstanding checks deposits refer to a deposit that has been made but has yet to clear in the recipient’s account. Unlike a check, deposits have already been received by the bank and are being processed. Different banks have different processing times, but most outstanding deposits typically clear within three business days. An outstanding check refers to a check that has not yet been deposited or cashed by the recipient. Note that our policy is to void outstanding checks after 90 days. In addition, state law may require that we turn these funds over to the State of as unclaimed property if we do not receive your response by .

If the payee informs you that they did not get your original check, stop payment on it to confirm they are not being dishonest. You can reissue a fresh check or another form of payment, such as a direct money transfer from your account to theirs after you are certain that the payee is being truthful. The latter option ensures that you will not have another outstanding check in the future. Outstanding Checksmeans the outstanding checks issued by the Seller that are unpresented and unpaid as of the Closing. Fortunately, banks generally don’t honor checks written more than six months in the past. It may be necessary to issue a new check without getting the old check back if the original check was lost or destroyed.

Difference Between Outstanding Checks & Outstanding Deposits

To prevent problems, you should cash or deposit a check promptly after receiving it. Like business checks, personal checks are generally considered invalid after six months . Outstanding personal checks can cause budgeting problems, but you may have an easier time reminding a friend or family member to cash a check than a business payee. Individuals can reduce surprise withdrawals in personal accounts by using online bill payment instead of issuing paper checks.

The bank statement shows a $100 service charge for keeping the account open. ABC issued $50,000 checks that have yet to be cleared by the bank. After reading this post about outstanding checks, we hope you gained valuable information. Applying the information you’ve gained from this post, you should be able to avoid having outstanding checks and what to do with them if you have them.

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