STALE DATED CHECKS: How It can Affect Your Business

stale dated checks

These checks have a time limit of 12 months after they are issued by the government of America. In contrast to this, the check received from the state government is considered to be valid for 6 months. The rule for the validity of checks issued by the state government can vary according to the state legislature in America. Cashier’s checks are a type of “official check” and the rules surrounding them can be complicated. Some say cashier’s checks don’t expire, while others claim a cashier’s check is stale (out of date) after 60, 90, or 180 days.

stale dated checks

However, many businesses tend to put a length of time on the check for accounting purposes. Make sure to cash your federal tax refund check no later than a year from the date it was issued. This is why it is always best to contact the issuer before attempting to cash a stale or outstanding check. Making the call may be awkward, but accidentally slapping your grandma with a hefty overdraft fee is worse. If you have a problem with a stale or expired check, it’s best to consult with a financial lawyer who can advise you on the best course of action. There may be legal remedies available to you as well as other steps an attorney can help you with to resolve the issue.

Learn the Essentials About Stale Dated Checks

The Uniform Commercial Code (UCC), which most states use as a model for the law, says that banks do not need to honor old checks. But banks can still process those payments if they believe the check is good. If you don’t have any luck contacting the check issuer, consider working with your bank. Some banks may deposit checks if they have reason to believe that the issuer is legitimate, and the company has enough funds in its account to cover the check.

stale dated checks

Some business checks will have “Valid For 90 Days” noted on the check. The issuing bank may not honor a business check if it is presented after the 90 day period. There are solutions that can a) proactively minimize the stale dated check problem to begin with, and b) deal with stale dated checks that do occur.

What Can I Do If A Bank Does Not Accept A Stale Check?

If he fails to remind his HR employee or any other professional who is in charge of taking the checks to the bank, they become stale-dated checks. There are a few things a person can do to prevent a bank from honoring a stale check. A check stop payment order is the simplest and most effective method. While a bank has the authority to decline an old check and even return it to the original issuer, it may also choose to honor it.

stale dated checks

Eight months later, you realize that the vendor has still not cashed the check. The only difference is that when issuing a cashier’s check, the bank withdraws the funds from the purchaser and then issues the check on the purchaser’s behalf. Because the paying bank receives funds upfront, the recipient doesn’t have to worry about dealing with a bad check. You draw this cheque against your account and you have the bank guarantee the cheque. Once it’s certified, your bank will back the cheque writer or issuer as genuine. This means that they know that you are going to have enough funds in your account to cover the overall cost of the cheque that’s getting sent.

Is it Possible to Cash or Deposit a Stale-dated Check?

Sometimes you might need to sign a cheque over to allow someone else to deposit it. These can get cashed by someone other than the named person on stale dated checks the front of the cheque. The biggest difference is that when you issue a cashier’s cheque, your bank is going to take funds from the purchaser.

  • IRA account fees and product information provided by Retirement Clearinghouse, LLC is subject to change without notice at the discretion of the IRA Provider.
  • The best thing that you can do is keep track of all the cheques you have issued, and make a note of whether or not they have been cashed or not.
  • Understanding how they work can let you avoid paying extra fees and will only benefit your accounting processes.
  • A “stale” check — one that hasn’t been cashed within six months of the original issue date — can cause you problems and cost you in bank fees.
  • A stop payment can help stop the vendor, merchant or person from cashing it.

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