​What Should Your Business Do with Checks that Haven’t Cleared?

If you’re responsible for your business’s books, you’re probably familiar with the hair-pulling, teeth-gnashing joy frustration of reconciling your bank statements only to discover checks that haven’t cleared.

You might be tempted to just void those checks. Don’t do it! If your state finds out, you’ll likely face big-time penalties.

So, what should you do instead?

We’ll get there, promise! But let’s take a quick second for some background.

Those checks that haven’t cleared are considered “unclaimed property.” Sounds fancy, huh? But what does it mean?

Usually, unclaimed property is some kind of personal property that your business issues, holds, or owes and that the rightful owner hasn’t claimed during a specific period of time. After that timeframe, the property has to be remitted to the state.

Each state has different rules. For this post, we’ll mostly be talking about South Dakota and Wyoming, since we operate in those states (sorry, other states). You can see South Dakota’s rules for unclaimed property here and Wyoming’s here. If your business isn’t in either of those, check your state’s taxing authority or treasurer’s site.

You can often find a notation on business checks that says how long they’re valid for. Usually, they’re good for between 90 days and a year. Checks older than those periods are sometimes called “stale dated.” You can find them in your bookkeeping by regularly reviewing your bank reconciliations. (Bonus tip: If you have QuickBooks Online, this page explains how to run a report of checks that haven’t cleared.)

OK, you’ve got your list of checks that haven’t cleared. Now what?

Here’s a quick-hit step-by-step process of what to do:

• Decide what type of check it is. Is it for payroll? A vendor check? Some other kind of payment?
• Figure out how long you need to keep that check on your books, depending on your state’s rules.
• Contact the recipient to ask if they received the check.
  • If they lost or accidentally destroyed the check, contact your bank to stop payment, and reissue the check to the recipient.
  • If they have the check but haven’t deposited it, let them know they’ll need to do so right away or you’ll need to remit the check to your state’s unclaimed property department.
• If they still don’t deposit the check, send them a formal letter letting them know you’ll be remitting the check.
• Report unclaimed property, and remit the funds to your state.

It can be a tricky issue to navigate, so if you need help with your unclaimed property, let us know.