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You can track an outstanding check by recording the check number and payment amount in your checkbook ledger and deducting the amount of the check from your record of the available balance in the account upon which the check is drawn. Once the check is presented for payment, your bank removes the money from your account. The bank then notifies you that the transaction regarding the check is complete, usually by providing a monthly account statement that lists the check as paid and, in some instances, providing the original or a copy of the canceled check to you for your files.
A check is a legal payment substitute for cash. Every check document contains certain standard information, including the bank name, routing number, and account number that indicates where the account that contains the money to pay the check is located and a check number in the upper right hand corner. This information is used by the parties to the transaction and the bank to track the check through the payment system.
Every checking account owner is responsible for maintaining an accurate record of the balance in the account. Like cash, you can use a check to make a payment without first notifying the bank or officially setting aside the money in the account. The bank has no way of knowing that certain funds in a checking account have been obligated by an outstanding check until the check is presented to the bank for payment. Once the check leaves your possession, there is literally no way to track it until the recipient presents it for payment.
An outstanding check can only be superficially tracked on paper by the account holder upon issuing the check. Then, it disappears from any tracking system while the recipient holds the check. It reappears for tracking once the recipient presents it for payment. If a recipient holds the check for an inordinate amount of time without depositing it for payment, it tends to create a problem in the account holder's records. Money remains available in the account that is actually obligated by an outstanding check, creating an opportunity for funds mismanagement and account overdrafts.
Account holders track an outstanding check on paper by keeping an account ledger that reflects a real account balance at any point in time. In the ledger, you record the check number and deduct the check amount from the balance in the account. The balance in the ledger will differ from the balance in the account until the check is presented for payment, but it reflects the available balance of uncommitted funds. At the end of the month, the bank provides you with an account statement and, sometimes, copies of canceled checks so you can reconcile your ledger to your account activity.