It prevents the other business owner who is on the client-side of the table from cashing old and new checks, thereby maintaining transparency in the business. 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. Typically, banks print the words “void after X days” on cashier’s checks that can go stale. If you’ve found a “forgotten” cashier’s check, look for this disclaimer. After the expiration date, the bank may consider the funds unclaimed property and transfer them to the state in a process called escheating2.

Why Do Stale Dated Checks Occur?

The person writing the cheque is known as the drawer, and the person receiving the cheque is known as the payee. Stale Cheque refers to a cheque which is expired because it is held by the payee for too long. There are a few ways to determine if a check is stale, whether you got it or wrote it.

Legal Considerations for Stale-dated Checks

From the perspective of the recipient, stale-dated checks can be a missed opportunity to receive funds that they are entitled to. Unclaimed property laws require businesses to report and remit unclaimed property, including stale-dated checks, to the state. Failure to comply with these laws can result in penalties and fines. It is important to keep accurate records of stale-dated checks normal balance and to regularly review and report them to the state.

What to do if you’ve issued a stale check

• Someone may tell you that they can’t cash your cheque because it’s stale-dated.
• As a small business owner, you should be writing checks from your business vs. personal bank account.
• If the issue date of the check is within the fiscal year (July-June) and notated as stale dated it may or may not have been cashed or re-issued.
• This means that if the original cheque was for a service provided, for example, then the money is technically still owed.
• 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.

Stale dated checks are a growing problem for plan sponsors, as the numbers of small-balance accounts and separated participants grow. Hashaw Elkins is a stale dated meaning financial services and tax professional, as well as a project management consultant. She has led projects across multiple industries and sectors, ranging from the Fortune Global 500 to international nongovernmental organizations. Hashaw holds an MBA in Real Estate and an MSci in Project Management. She is further certified in organizational change management, diversity management, and cross-cultural mediation. Someone may tell you that they can’t cash your cheque because it’s stale-dated.

Knowing that our accounts are error free on a daily basis is very important in todays market. We have many escrow accounts and sometimes people disburse from the wrong account. – If you’re the one who wrote the check and it has yet to be cashed, check with the recipient to see if they still plan to cash it.

Payroll, Housing and Food Services, Student Fiscal Services and UW Medical Center

Each state has distinct regulations regarding the timing for companies to disclose their unclaimed property. The dormancy period signifies the https://www.bookstime.com/articles/depreciable-property duration required for uncashed checks to qualify as unclaimed property. One presented a long time, 6 months or more after the date of issue.

Steps to Take When You Receive a Stale-dated Check

Certain checks may have shorter expiration periods, such as 180 days (six months) or even 90 days (three months), after which some banks may decline to process them. Place a stop payment order on the original check to prevent it from being cashed. The stop payment directs the bank not to cash the check, effectively voiding it.