What is an outstanding check? An outstanding check is a check that has been written, but it hasn’t been cashed deposited by the bank or cleared the bank. It can be either a personal or a business check.
So the time between when you write a check and the check clears your bank account is when the check is considered an outstanding check. In other words, an outstanding check is one that was written, but not cashed before the end of a statement period.
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Why Do Outstanding Checks Matter?
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.
Individuals need to account for outstanding checks when they balance their checkbooks! Whenever you write a personal check, you need to record the date, check number, payee, and amount in your check register. This is very important because you bank balance will be higher than your available funds until the check clears the bank. Record it to your register to remind you that those funds are for that check.
Balancing your checkbook is to what professional accountants do, it’s a way to make sure that you and your bank agree about your account balance and available funds. Balancing a checkbook can be a little bit difficult and we have a worksheet with step-by-step instructions to help you.
But if you don’t account for outstanding check properly, you will risk spending the money for the check on something else. This could result in a “bounced check,” and you might be charged a “non-sufficient funds” (NSF) fee by your bank. It can also damage your relationship with the vendor or person you gave the check to.
What to Do About an Outstanding Check?
If you wonder if outstanding checks expire, they do expire, so it’s important to record the date you wrote the check.
Here are a few things you should do about an outstanding check that you wrote to someone else:
|Less than six months||Older than six months|
Should You Write Another Check?
If the outstanding check is less than six month old, you should not write another check. The original check is still valid and they payee can either 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 get to the bank, you may want to ask them to return the check to you and you can pay them using another method.
If the outstanding check has expired, you may want to write another check, it’s possible that this check will go stale, too, and that would prolong the situation. When you ask they how they want to be paid, try suggesting a money order, cashier’s check, or cash. You can ask if they’re willing to deduct the stop payment fee from the original amount. They may not agree to that, but it’s worth asking.
It’s important to keep track of the amount of checks outstanding because they could be cashed 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! You can find the latest Huntington Bank promotions, bonuses, and coupons here! If you’re interested in another bank, check out other bank promotions here!