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. This means that the bank balance will be greater than the company’s true amount of cash. The State of Delaware’s unclaimed property reporting period is on a calendar year cycle (January 1st – December 31st).

• When you pay an employee with a paycheck, they do not have to cash it right away.
• A money-market account is a savings account on which checks can be drawn.
• Many states have reporting requirements regarding unclaimed property .
• If the payor spends some or all of the money that should have been held in reserve to cover the check and then said check is later cleared, the account ends up in the red.
• It’s important to keep track of the amount of checks outstanding because they could be cashed at anytime.

Individuals can reduce surprise withdrawals in personal accounts by using online bill payment instead of issuing paper checks. The amount of outstanding checks is sometimes referred to as float. 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, outstanding checks the payee will need to receive a replacement payment from the payer. Reconciliation is an accounting process that compares two sets of records to check that figures are correct, and can be used for personal or business reconciliations. Petty cash/imprest fund custodians are responsible for maintaining outstanding check lists for their respective accounts.

Outstanding Checks

This could result in a « bounced check », and you may be charged a “non-sufficient funds” fee by your bank. It may also damage your relationship with the vendor or person you gave the check to. 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. You can have outstanding checks for a number of reasons. When you pay an employee with a paycheck, they do not have to cash it right away. They might hang onto the check until they absolutely need to cash it.

• This may present the false notion that there is more money in the account available to be spent than there should be.
• Make sure you establish procedures for dealing with unclaimed paychecks before these issues come up.
• Your bank account will show a higher balance than your books.

As an employer, you need to make an effort to contact your employee or former employee about the outstanding paycheck. Having outstanding or unclaimed checks doesn’t mean you’re off the hook. You need to make an effort to take care of the liability. Existence is of principal concern to the auditors in the examination of accounts payable.

G/L Pd Ending Date, Bank Statement Ending Date

As mentioned above, you may need to return the original check or sign documents confirming the check is lost or destroyed. You may also need to pledge not to deposit both checks. If you cannot find the issuer, consult your state’sabandoned property program to claim assets. Businesses must track outstanding items to avoid breaking unclaimed property laws.

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. The payee may cash the check immediately or might hold onto it for months. Checks that remain uncashed for long periods of time are called stale checks. This period can range from 60 days to six months.