What is an Uncleared Check?

An uncleared check is a check that has not yet been paid by the bank on which it was drawn. Such a check has already been recorded by the payee and presented to its bank. There is a clearing cycle that must then be completed that lasts several days. During the clearing cycle, the payee's bank presents the check to the payer's bank, which then forwards the cash amount stated on the check to the payee's bank. During the clearing cycle, the payee does not have use of the cash.

Characteristics of an Uncleared Check

The key characteristics of an uncleared check as are follows:

Written but not cleared. The check has been issued and delivered to the payee but has not yet been processed or debited from the issuer's bank account.
Time lag. There is often a time delay between when the check is issued and when it is presented for payment and cleared by the bank. This delay may be caused by the payee not depositing the check immediately or bank processing times.
Remains on issuer’s bank reconciliation. Until the check clears, it remains listed as an outstanding item during the bank reconciliation process.
Legal obligation. The issuer of the check is legally obligated to ensure that sufficient funds are available to honor the payment until the check clears.
Stale date risk. If the check is not presented for an extended period (e.g., six months in many jurisdictions), it may become stale-dated and no longer valid unless reissued or honored by the bank.
Does not appear in bank statement. An uncleared check does not appear in the payor's bank statement because it has not yet been processed by the bank.

Terms Similar to Uncleared Check

An uncleared check is also known as an outstanding check.

Example of an Uncleared Check

International Hats imports unique hats and then sells them to its discerning clientele within the United States. Anna, the controller, writes a $2,500 check to her freight forwarding company on March 1. She records this in the company’s accounting software on that date, which reduces her cash book balance by $2,500 and eliminates the related payable obligation.

At month-end, Anna conducts a bank reconciliation and notes that the check has not yet been deducted from the company’s bank balance. This means that the check has not cleared the bank, so the check can be classified as an uncleared check. She records the uncleared check on her bank reconciliation as a reconciling item. She also contacts the freight forwarding company to see if they ever received the check, since such a long delay in check clearing could mean that the check has been lost in the mail.