Outstanding Check: Definition, Risks, and Ways to Avoid

Routing Number Results are Updated Daily from the eRoutingNumber™ Database. This database includes exclusive data, not offered by other sources, like Fake Routing Numbers, and the Fraction Code or Fractional Routing Number found on the face of printed checks.. On 01 Jan 202X, Company A brings a check to its supplier, the check will be effective on the same day. The supplier’s staff has misplaced the check and failed to deposit it. On 01 Dec 202X, the supplier just bring the check to the bank and wish to deposit it into their account. HBL CPAs is a full-service Certified Public Accounting firm based in Tucson, Arizona.

Pay your team

While a stale-dated check is not necessarily invalid, banks may deem it an “irregular” bill of exchange and refuse to honor it. At this point, the only way to process the payment is if the drawer — otherwise known as the check writer or issuer — changes the date on a replacement check or issues a new check. A stale dated check is one that has not been cashed or deposited by the recipient within a certain period of time, usually six months. An expired check is one that is no longer valid due to the passage of time and cannot be cashed or deposited. Landlords often issue rental payments with post-dated checks to ensure that rent is paid on time.

A check issued for rent that was never cashed

The bank declines to honor the check and “bounces” it back to the account holder, who is typically charged a penalty fee for nonsufficient funds (NSF). Sometimes, the payee forgets to cash the check, or the check gets lost or misplaced. In other cases, the issuer may stop payment on the check, or the account it was drawn on may have been closed.

Stale Dated Checks

Let’s say the opposite happens, and you are on the receiving end of a check that has expired. The company may be willing to reissue the check, even stale dated check definition if it’s stale. Uncashed checks to vendors, contractors, employee payroll, and distributions to stockholders are all potential unclaimed property.

If they need the cash early, they should bring back the check and ask the issuer to renew with an early date. A cheque is a document that orders a bank to pay a specific amount of money from a person’s account to the person in whose name the cheque has been issued. The main purpose of a cheque is to make payments conveniently without the need to carry large amounts of cash.

The eRoutingNumber™ database uses many different sources and has evolved since 1998, and now utilizes user reporting to keep the data in check. Any user can report a routing number missing, invalid, or provide details not included. Some checks come printed with text stating that a check becomes void after 90 days. This can be safely disregarded as an attempt to remind people not to hold a check for too long.

• There are a few ways you can determine if a check is stale-dated, whether you received the check or have concerns about a check you’ve written.
• This is because after six months, most banks and credit unions will refuse to cash checks as they consider them “stale” after this period of time has passed.
• If the stale check is returned for any reason, then a person’s bank may charge a fee for returning the check to the person.
• Postdating checks carries risks and is generally not the best way to manage your payments.
• In addition, post-dating a check can lead to confusion and may result in overdrafts and fees.
• It means if the employer fails to encash an issued check even after half the year has passed, the bank teller might consider it stale-dated.

• Banks will not do so because of the accounting ramifications it can have.
• Now, let’s dive deep into understanding a stale-dated check and how it functions.
• It will also prevent the person from making any deposits, as all transactions will be effectively stopped or “frozen” until the account is unfrozen.
• You should also keep diligent records of the attempts you made to contact the business owner.
• As we move towards a more digital economy, the use of checks has decreased considerably.