What Are Outstanding Checks?
Outstanding checks are checks a business has written and recorded in its books that have not yet cleared the bank. The payee may not have received or deposited the check, or the bank may not have processed it by the statement date. Until the check clears, the bank balance is higher than the book balance by that amount. Outstanding checks are also called uncleared checks.
How to Find Outstanding Checks
- Start with the check register.
List every check issued through the statement date. - Tick off cleared checks.
Match each check number and amount to the bank statement. - List what is left.
Every check without a match is outstanding at the statement date. - Total the list.
Subtract that total from the bank balance in the reconciliation. - Review aged items.
Investigate any check outstanding for more than 60 to 90 days.
Accounting software shows the same thing: during reconciliation, checks not marked as cleared are the outstanding checks. A running outstanding checks report is a useful control between month-ends.
How Outstanding Checks Work in a Bank Reconciliation
In a bank reconciliation, outstanding checks are subtracted from the bank statement balance. The business already reduced its own cash when it issued the check, so the bank balance has to come down to match. They are a standard reconciling item described in bank reconciliation, alongside deposits in transit.
FORMULA
Adjusted bank balance = Bank statement balance + Deposits in transit - Outstanding checks
EXAMPLE
A bank statement shows $48,200. Deposits in transit total $3,100, and three checks totaling $5,640 have not cleared. The adjusted bank balance is $48,200 + $3,100 - $5,640 = $45,660, which should equal the adjusted book balance.
Normal outstanding checks need no journal entry. The books already reflect the payment, so only the bank side of the reconciliation is adjusted.
A Common Outstanding Check Mistake
The most frequent error is applying a check to the wrong side of the reconciliation. Outstanding checks come off the bank balance. They are never added to the book balance, because the books already reflect them.
COMMON MISTAKE
If the adjusted bank balance and the book balance are out by exactly twice an outstanding check, the check was probably added instead of subtracted. Halve the difference to find the amount, then look for a check of that size.
A second source of trouble is a check recorded twice or in the wrong period. A duplicate entry shows up as an uncleared check that no payee ever received, so it sits on the list until someone investigates. Reviewing the oldest items first usually finds these quickly.
Why Checks Stay Outstanding
Most outstanding checks clear within a few days. The ones that linger usually have a specific cause:
- Mail and processing time:
Checks issued near the end of the month often clear in the following month. - Payee delay:
Vendors hold checks before depositing them, sometimes for weeks. - Lost or misdirected checks:
The payee never received the check, so it will never be presented. - Voided or replaced checks:
A replacement was issued but the original was never voided in the books. - Stale checks:
The check passed its validity period and the bank may refuse it, described in stale-dated check.
Old Outstanding Checks and Journal Entries
A check that stays outstanding for months stops being a timing difference and becomes a decision. How it is handled depends on its age and whether the payee can be found.
- Check being replaced:
Void the original by debiting cash and crediting accounts payable, then issue the replacement. - Check stale-dated and payee reachable:
Void the original, restore the liability, and pay by a new check or ACH payment. - Payee cannot be found:
After the holding period set by state law, the amount is reported as unclaimed property, described in escheatment.
Some companies group these under a miscellaneous outstanding checks line until they are resolved. Left unreviewed, that line hides unpaid vendor liabilities and misstates cash.
Frequently Asked Questions About Outstanding Checks
1. What is an outstanding check in simple terms?
A check you have issued that the bank has not paid yet. Your books already show the money as spent, while your bank balance still includes it. Until the payee deposits the check, it appears as a reconciling item between the two balances.
2. Are outstanding checks added or subtracted in a bank reconciliation?
Outstanding checks are subtracted from the bank statement balance. The business already deducted them from its books when it wrote them, so the bank balance has to be reduced by the same amount before the two balances can agree.
3. How do you find outstanding checks on a bank statement?
Compare the check register to the bank statement and mark each check that appears as cleared. Any issued check with no matching statement line is outstanding. Total those amounts and subtract them from the bank balance in the reconciliation.
4. What is the journal entry for outstanding checks?
Normal outstanding checks need no journal entry because the payment is already in the books. If a check is voided, debit cash and credit accounts payable to restore the liability. If the payee cannot be found, the amount may move to unclaimed property.
5. What are miscellaneous outstanding checks?
Miscellaneous outstanding checks are old uncleared checks grouped on one line, often with no payee follow-up. Because the money is still owed, they usually move back to accounts payable or are reported as unclaimed property after the state holding period ends.
