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How Checks Clear: How Fast Money Moves After Deposit

what does it mean when a check is outstanding

GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology. Outstanding checks aren’t necessarily inherently bad; however, there are some risks and downsides to have checks linger. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market.

what does it mean when a check is outstanding

What Are Some Best Practices for Managing and Clearing Outstanding Checks?

As businesses have to abide by the unclaimed property laws, any checks that have been outstanding for a long time must be remitted to the state as unclaimed property. As such, there is no incentive to wish for an outstanding check to permanently never be cashed as the payment is subsequently owed to the government for holding. Forgotten outstanding checks are a common source of bank overdrafts. One way to avoid this occurrence is to maintain a balanced checkbook. This can help prevent any unnecessary NSFs if the payee decides to cash the check at a later date. Keeping large credit card balances could lower your credit score even if you’re making payments on time.

what does it mean when a check is outstanding

Why Outstanding Checks Matter

Unlike a check, deposits have already been received by the bank and are being processed. Different banks have different processing times, but most outstanding deposits typically clear within three business days. However, if the payee delays depositing the check, then the payment does not clear the payor’s account. The amount of the check still cannot be used by the payor, as it’s promised to the payee, even though the bank account balance has yet to reflect the check payment. Outstanding checks are checks that have been issued but not yet presented for payment or cleared by the bank.

  • You’ll want to take all reasonable steps to cash or deposit outstanding checks.
  • As a result, the actual displayed amount in an account (meaning current or available balance) can vary from time to time.
  • When checks originate from overseas accounts, things can take much longer.
  • However, if the payee delays depositing the check, then the payment does not clear the payor’s account.
  • When you pay someone by check, your payee must deposit or cash the check to collect the payment.
  • If the check is older than six months, the check may be stale or void.
  • The payee will find the money didn’t arrive in their account, which could, in turn, even cause them to overdraft their own account.

What To Do if You Have a Stale Check

  • Your best bet is to contact your bank and get a firm answer on the status of the check.
  • Checkout registers that are equipped with check scanners can instantly convert your paper check into an electronic check.
  • If a check is destroyed or never deposited, the money remains in the payer’s account.
  • An outstanding check is a check that a recipient fails to deposit.
  • If a check is outstanding for less than six months, you generally don’t want to write a new one.
  • Maneuvering through the financial labyrinth of checks, especially outstanding checks, demands awareness and action.
  • A check that was written moments, weeks, or even months ago is considered outstanding if it has not yet been cashed or deposited.

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. One of the main differences are the outstanding checks that have been recorded in the accounting system but haven’t been recorded by the bank. An outstanding check is a check payment that has been recorded by the issuing entity, but which has not yet cleared its bank account as a deduction from its cash balance.

what does it mean when a check is outstanding

Outstanding Checks vs. Stale Checks

  • They are not tax efficient and an investor should consult with his/her tax advisor prior to investing.
  • A checking account is an account that’s designed for daily spending.
  • As a rule of thumb, assume that funds leave your account about two days after you pay by check, but that time frame can easily change.
  • An outstanding check also refers to a check that has been presented to the bank but is still in the bank’s check-clearing cycle.

Keep reading to find out what an outstanding balance is and how it affects you. Remember, each bank has its own policy and can use its own discretion when helping you resolve this matter. outstanding checks If you think you have unclaimed funds that may have been escheated, visit the official Unclaimed Money from the Government database and search for unclaimed money in your state.

Most credit card issuers provide access online and through a mobile app. You can also call the card issuer’s customer service phone line to get your outstanding balance. Usually, credit cards list the issuer’s customer service phone number on the back of the card.

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Actualizado el 26 junio, 2024 por Jennifer Torres
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