You sent that vendor a check last fall, but he still hasn’t cashed it. And not just one! You’ve got checks showing up on your Bank Reconciliation Report as “outstanding” since last October and you've been putting off dealing with them. But I suggest that now's the time. Why? One reason: Stale-dated checks are often an indication of other bookkeeping problems – and auditors hate them. I know you’re busy – dealing with other year end issues, but now’s a great time to handle them – even if they haven’t hit that magic “void if not cashed by” date.
How old is a stale-dated check? Your district or your auditor likely has guidelines. Check with them. Is it 6 months, a year? And they probably have recommended procedures too – about how to void the check, whether to reissue another check, etc.
What if you do nothing and let them sit? Watch out that you don’t get dinged in an audit. If you have stale-dated checks on your bank reconciliation report at year end, chances are you’re going to get written up for it. Do yourself a favor and get them handled now.
Best bet? Call that vendor and ask “Why haven’t you cashed this?” Sure, it’s time consuming, but it’s the easiest way to determine what to do. Chances are they never got it – maybe they moved, maybe it got lost. But maybe there’s a problem with it that you never heard about because they never let you know. It’s a lot easier to decide how to handle each individual check if you have a little information.
And – whatever you do - don’t just void the check and drop the issue there. That money doesn’t belong in that account. The GL Account for that club or class will now be artificially higher than it should be and that’s not a good thing.
Take the time and clean up stale-dated checks now – before they bite you!
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Question on your last paragraph "Don't just void the check and drop the issue... That money doesn't belong in that account." Why can't you void the check in the account it was written off of? Then the funds would be credited to the proper account.
ReplyDeleteThe reason I say "don't just void the check and drop the issue" is this. Yes, the money would, of course, be back in the original account it came from. But I see a potential problem if you void the check without notifying the vendor. Because IF the vendor still has the check and eventually cashes it, you're going to have to re-renter it (causing uncessary work). I will tell you that we get support calls about re-entering voided checks that somehow 'mysteriously' cleared the bank all the time.
ReplyDeleteAlso during the time before the check IS cashed, the real balance in that account is artifically high - leading many an advisor to think, "Oh, there's more money I can spend" without realizing the true situation. I just think it's better to do the phone calls BEFORE you void the durn thing. I think it saves headaches later.
So how should stale dated checks be dealt with? What is the proper procedure? If we do contact the vendor and get no response to why the check hasn't been cashed, then is it okay to void the check rather than leaving the check hanging out there?
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