It used to be that when you wrote a check to a vendor and they didn’t deposit the check after 180 days, you could just write off the check and debit the money back to your checking account.

It was a pretty straightforward process. You had a list of outstanding checks that had not been cashed yet, and as the 180-day mark passed for each check, you’d just go ahead and void the check. Writing out the process in steps it would look like this:

  1. Create a list of outstanding checks or get a list from the bank.

  2. Void checks that no longer are redeemable.

  3. Add the amount of the voided check back onto your checkbook balance.

  4. Create an adjusting journal entry where you debit your bank account for the amount of the voided check and credit the expense account that was originally debited.

  5. Remove the check from the list and be done with it.

Unclaimed Property Law

With recent changes to unclaimed property laws, you should check with your state to see what the requirements are for an outstanding check. You can find out your obligations as an unclaimed property holder in your state by searching for “unclaimed property laws + your state.” Here’s the Unclaimed Property Holder Handbook for the state of California, as an example.

You can report a liability, along with the amount that was remitted, to your state’s Office of the Controller. The best solution, though, would simply be to pick up the phone and call your vendor.

In general, fewer people are using checks. It’s getting easier to process payments, so it probably doesn’t come up as much for B2C businesses as it did when more consumers wrote checks. Most accountants prefer to cut a check because it leaves a paper trail that is easy to track, so unclaimed checks will probably continue to persist for businesses paying other businesses.

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