Outstanding checks bank reconciliation rules explained
Outstanding checks are the most common reconciling item there is, and the one most often handled wrong. This guide explains where they belong, how to carry them from month to month and what to do with checks that never clear.
What an outstanding check is
An outstanding check is a check you have written and recorded in your books that the bank has not paid by the statement date. The payee may not have deposited it yet, or it is still moving through the banking system. Your books already show the money as gone, the bank still shows it in the account.
Where outstanding checks go in the reconciliation
Outstanding checks are a timing difference on the bank side. You subtract them from the balance per bank statement to get the adjusted bank balance. They never need a journal entry, because your books are already right.
| Line | Amount |
|---|---|
| Balance per bank statement | $18,400.00 |
| Less outstanding check 2210 | $1,250.00 |
| Less outstanding check 2214 | $380.00 |
| Adjusted bank balance | $16,770.00 |
If the balance per books is also $16,770.00 after book side adjustments, the account is reconciled. See a complete month in the bank reconciliation example.
Carrying them forward
Each month, start with last month's list of outstanding checks. Tick those that cleared on the new statement and add new ones written this month that have not cleared. A check that stays on the list for more than one or two months is worth a look.
Stale checks and what to do with them
- After 60 to 90 days, contact the payee. The check may be lost, or the payee may not know it was sent.
- If the payee needs a new check, void the original in your books first, then issue a replacement. Consider a stop payment with the bank.
- Banks may refuse checks older than six months, but the obligation to the payee usually remains.
- Money owed on checks that are never cashed may eventually have to be reported and remitted to the state as unclaimed property. Rules and holding periods differ by state, so check yours before writing an old check off.
Common mistakes with outstanding checks
- Recording a journal entry for outstanding checks. They are timing items, not book errors.
- Voiding old checks to make the reconciliation look tidy without contacting the payee.
- Reusing a check number after a void, which confuses matching later.
- Forgetting checks written by hand that were never recorded at all. Those show up as bank side items once they clear.
Let the list build itself
BankReconciler marks every check that is in your ledger but not on the statement as outstanding, carries it into next month's run and shows how long it has been open. Checks that clear later match on check number even if the dates are far apart. Read about the process of bank reconciliation.