Outstanding Checks Financial Reporting

When you open the Outstanding Checks subtask, all detail transactions
that qualify automatically fill the table window. The Count display
in the menu bar indicates the total number of detail transactions. You
can use the Subquery function from the menu bar to select parameters for
viewing a subset of the detail records, if desired. Please note that by law we are required to issue replacement checks in the name of the original payee(s) only. If a check is destroyed or never deposited, the money remains in the payer’s account.

Therefore, from the bank’s perspective, the terms debit and credit are correctly applied to the memoranda. If this still seems confusing, you may want to review the chart on page 19 and think about how the company classifies their account as an asset while the bank classifies the company’s account as a liability. 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. Since the company mailed the check, they would have credited cash, but the bank would not process the check until the customer deposits the check. Outstanding checks should be subtracted from the balance per bank statement. For example, a check may have been written and recorded by a company on December 31.

What is an outstanding check?

To reconcile outstanding checks with your bank statement, compare the checks issued but not yet cleared with the information provided on the statement, ensuring that both records align. On your reconciliation sheet, outstanding checks are often subtracted from your balance per bank because these withdrawals have not yet happened but are simply a timing matter. Interest income reported on the bank statement has usually not been accrued by the company and, therefore, must be added to the company’s book balance on the bank reconciliation. The final transaction listed on the Vector Management Group’s bank statement is for $18 in interest that has not been accrued, so this amount is added to the right side of the following bank reconciliation. This is why your (or company) bank accounts need to be reconciled with the bank statement. There is a discrepancy between what your checkbook or accounting system says you have in your account and what the bank reports on your monthly statement.

• This means that the bank balance will be greater than the company’s true amount of cash.
• The Vector Management Group made a $3,000 deposit on the afternoon of April 30 that does not appear on the statement, so this deposit in transit is added to the bank statement balance.
• Outstanding checks also have the risk of being used in fraudulent conduct.
• 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.
• For example, a check may have been written and recorded by a company on December 31.
• Be mindful of what outstanding checks you’ve written before drawing down your bank balance.
• Proper management of outstanding checks involves tracking, reconciliation, timely communication, and ensuring sufficient funds are available to honor the checks when presented for payment.

If an outstanding 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. Writing checks makes it possible for organizations and individuals to make payments without requiring instantaneous outstanding checks cash or electronic transactions to be completed. Checks that linger only buy the company more time to gather up enough resources for payment to clear if more time is needed. Checks that remain outstanding for long periods of time cannot be cashed as they become void. Some checks become stale if dated after 60 or 90 days, while others become void after six months.

Outstanding State Issued Checks

They represent pending transactions where the funds have not yet been deducted from the issuer’s account. These checks can pose risks such as overdrawing the account, potential fraud, accounting discrepancies, and delayed financial reporting. 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.

If the old check is deposited, your bank might honor it, and you could consequently end up paying double. You can also call or write to remind the payee that the check is outstanding. If they haven’t received the payment, this may nudge them to notify you to reissue the check. Last, outstanding checks might have an impact on management of the cash flow.

Convert Outstanding Checks

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. Balancing your checkbook is akin to what professional accountants do during reconciliation. It’s a way of making sure that you and your bank agree about your account balance and available funds. It can be tricky to balance a checkbook and we have a worksheet with step-by-step instructions to help you. This database consists of outstanding state-issued checks that are over two (2) years old and provides payees with information to assist them with requesting a replacement check from the issuing agency.

If no response is received from the payee and the check is over one year old, again every effort is made to contact the payee and inform him of his claim to the monies. If we again do not receive a response, the unclaimed monies are forwarded to the Virginia Department of the Treasury, Unclaimed Property Division. At this point, if the payee chooses to claim the funds, he must contact the Commonwealth.

G/L Pd Ending Date, Bank Statement Ending Date

However, due to the time necessary for the payee to receive and process the check, make a deposit, and the money to clear the banking system, this transaction will appear on the company’s January bank statement. The reconciliation process will identify these differences as due to outstanding checks. 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.