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. Checks that remain outstanding for long periods of time can’t be cashed, as they become void. Outstanding checks that remain so for a long period of time are known as “stale” checks. Some checks become stale if dated after 60 or 90 days, while all become void after six months. As a small business owner, you should be writing checks from your business vs. personal bank account.
- The standard period is usually 180 days, i.e., 6 months, from the date on which the check is issued.
- To make a case for punitive damages in a situation in which a bank wrongfully honored a stale check might be challenging.
- – Contact the person who wrote the check and ask if they can give you a new one.
- However, even if it seems expired, the bank might still accept it.
- It may be too old to be processed by a bank, credit union, or other financial institution.
What are the risks of cashing a stale-dated check?
- Banks, credit unions, and other financial institutions are not required to honor stale checks.
- These checks can pose risks such as overdrawing the account, potential fraud, accounting discrepancies, and delayed financial reporting.
- Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
- Thankfully, mobile deposit and other technological advances have helped make depositing checks a quick and simple process.
- Banks are still allowed to process a stale check as long as the institution deems the funds are good.
- What do you do if a cheque gets lost, has an error or gets stolen?
- That can help you avoid having the check returned and your account debited a fee.
A stale check is a check that remains undeposited or uncashed long after the date on which it was issued. It may be too old to be processed by a bank, credit union, or other financial institution. A stale check is also referred to as a “stale-dated check” or an “expired check.” The length of time that a check is considered to be valid may vary from state to state. Also, the issuers of checks sometimes note a time limit on their checks’ validity on the face of the check.
Risks of Outstanding Checks
- At a certain point, stale checks can reach the time period set by the state (the one where the issuing bank is) and are then handled under escheatment laws.
- A stop payment informs your bank that you do not want the check cashed and essentially voids the check.
- Additionally, the check writer or financial institution might outright reject the transaction.
- 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 these options don’t work, you can check with the state where the issuing company is located.
- While cheques aren’t as common today as they once were, it’s still worth knowing some of the different types.
- Some business checks will have “Valid For 90 Days” noted on the check.
Uncashed checks are those that the payer has written but the payee has not yet cashed or deposited. Uncashed checks that are outstanding for over six months are considered stale. A cashier’s check is normal balance essentially a check drawn on the bank’s own funds.
Cashing old checks: How long is a check good for?
Different types of checks are valid for different amounts of time. The offers that appear on this site are from companies that compensate us. But this compensation does not influence the information we publish, or the reviews that you see on this site.
Accounting inconsistencies may arise if outstanding checks are not reported and tracked in the appropriate manner. Because of stale dated meaning this, keeping correct financial records can be difficult, and it may lead to problems during audits or when reconciling finances. For example, payments may show as being paid but if the cash has not yet been debited from the account, there may be inconsistencies worth reconciling. Even if banks are only legally required to honor checks for a six-month period, it is usually a good idea to avoid any potential problems by depositing checks when you receive them.
MANAGING YOUR MONEY
- You want to have processes in place to pay bills, settle any debts and pay your employees.
- Cashing a check promptly ensures that you can access the funds without issues, such as the check bouncing or having it go stale.
- US Treasury checks are government-issued checks valid for one year from the date issued.
- Practically all checking accounts have zero interest, meaning most people only keep just enough in the account to pay the bills.
- Once it’s certified, your bank will back the cheque writer or issuer as genuine.
- As per the law, usually, the 6-month time frame for check clearance is applied to personal and business checks in the U.S.
If you’re not able to contact the original issuer or they are not willing to reissue the check, ask your bank and the issuing bank if the check can still be deposited. Stale-dated checks are outdated checks issued to the bank after the payment date has expired. Hence, an employer must be very cautious about issuing checks for different departments including payroll and other business areas. Being proactive and https://www.bookstime.com/ timely checking the banking transactions can assist the business owner in avoiding these checks and even guarantee less complexity in his professional life. Deskera is a one-stop solution to handle the payroll of your employees and makes use of cutting edge technology to handle business transactions at the touch of your fingertips. For a payroll check, it is best to contact the employer to reissue the check.