What is an outstanding check?
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. An outstanding check is a check payment that is written by someone but has not been cashed or deposited by the payee. 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 is a check that a company has issued and recorded in its general ledger accounts, but the check has not yet cleared the bank account on which it is drawn. This means that the bank balance will be greater than the company’s true amount of cash. 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. From there, you can simply change the payment account of your outstanding checks into the correct bank account once the amount has been posted into your bank statement. 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.
City Government & Departments
Hospitals do not review to determine that unclaimed bonds or interest payments are properly reported. However, if you choose to use a commercial service charging a fee to help you locate your money, please note that Texas law limits the amount of fees they may charge to 10% of the value of the unclaimed property involved. Please note that by law we are required to issue replacement checks in the name of the original payee(s) only.
There are strict schedules to provide the information, along with the corresponding amount of funds, to the state for safekeeping until the payee claims them. Severe fines and penalties are imposed for any asset that is not remitted to the state per their schedule. These fines and penalties are charged to the school or department’s PTA responsible for the noncompliance. Once such checks are finally deposited, they can cause accounting problems. Furthermore, checks that are never cashed may constitute “unclaimed property” that is turned over to the state.
Why Checks Aren’t Cashed
The exception is uncashed payroll checks, which are presumed abandoned after one year. 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. Outstanding checks and unclaimed property held by the City can be found below.
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. 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. Outstanding checks are checks that have been issued but not yet presented for payment or cleared by the bank.
What Are the Consequences of Bouncing an Outstanding Check?
Check to see that the contact information is correct, as checks may go missing simply because of an incorrect mailing address. 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. Be mindful of post office conditions and potential delays for seasonality, weather, or staffing issues. For payroll checks, the abandonment period is one year, rather than three years. 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.
With banking activity becoming increasingly electronic, another way to avoid writing a check and forgetting about it is to use the checking account’s online bill pay service. This should provide real-time information about the total dollar amount of checks outstanding and the total dollar balance present in the account. Tracking of payments can be accomplished through the use of checks, which provide both a paper trail and evidence of payment. Through the use of the check, the sender and the recipient of the payment are able to retain a record of the transaction, which includes the date, the amount, and the payee. In this context, an outstanding check need not be outstanding for long; it may simply be the short period of time between when a check is mailed and when it is received. Accounting inconsistencies may arise if outstanding checks are not reported and tracked in the appropriate manner.
To view property held by the State of Texas, visit the Office of the Texas Comptroller website. 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. Outstanding checks that remain so for a long period of time are known as stale checks. 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. If you are aware of your department issuing checks, gift cards or other stored value cards that may have items or balances still outstanding, please contact Cash Management & Operations, Office of the Treasurer.
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. 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 check is cashed after you asked a bank to stop the payment, you will be responsible for outstanding checks proving that you took the necessary steps to complete the payment. If the outstanding check is less than six months old, you should not write another check. 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.
Because money may be received from several sources to pay a patient bill, occasionally payments cannot be matched to an amount owed. Online payments offer a more direct way of transferring the funds between you and the payee. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. If you wrote a check and it has been outstanding for a while, you may be wondering, “Do checks expire?
- To claim your funds, please print out and complete this Unclaimed Funds Affidavit.
- The exception is uncashed payroll checks, which are presumed abandoned after one year.
- A check issued by the State of South Carolina does not have an expiration date, but some financial institutions may not accept a check older than 90 days.
- This typically occurs after a few years, but timetables vary from state to state.
- Our review course offers a CPA study guide for each section but unlike other textbooks, ours comes in a visual format.
- If the outstanding check is less than six months old, you should not write another check.
- Even if the checkwriter has sufficient funds, any delay from the depositor simply means higher interest revenue on the capital balance waiting to be drawn down.
- This should provide real-time information about the total dollar amount of checks outstanding and the total dollar balance present in the account.