Law Firm Outstanding Check Reconciliation Guide

An outstanding check is a check that has been issued and recorded by a law firm but has not yet appeared among the cleared transactions in the bank account.

Some outstanding checks are normal.

A check may take several days or weeks to be deposited. Other checks may remain unresolved because they were lost, voided, replaced, entered incorrectly, or issued to a recipient who never deposited them.

A structured outstanding-check reconciliation helps the firm distinguish recent timing differences from older transactions that require action.

---

What is an outstanding check?

A check becomes outstanding after it is issued but before it clears the bank.

For example:

• The firm writes a check on March 5
• The payment is recorded in the check register
• The recipient deposits it on March 20
• The bank processes it on March 21

Between March 5 and March 21, the check is outstanding.

The existence of an outstanding check does not automatically indicate a problem.

The age, value, purpose, and status of the check determine whether further review is necessary.

---

Why outstanding checks matter to law firms

Law firms may issue checks for many different purposes, including:

• Vendors
• Court-related costs
• Experts
• Medical-record providers
• Investigators
• Clients
• Settlement-related payments
• Reimbursements
• Referral-related payments
• Office expenses
• Insurance
• Contractors

When checks remain outstanding, the firm may need to determine whether:

• The recipient received the payment
• The check was deposited
• A replacement was issued
• The original check was voided
• The payment remains valid
• The amount is still reflected correctly in the firm's records

A complete outstanding-check list supports more reliable review of unresolved payments.

---

Data required to identify outstanding checks

The firm needs:

Issued-check data

Useful fields include:

• Check number
• Issue date
• Amount
• Payee
• Bank account
• Check status
• Matter or payment reference
• Memo
• Internal transaction ID

Cleared-check data

Useful fields include:

• Check number
• Cleared date
• Cleared amount
• Bank account
• Bank reference
• Transaction description

The reconciliation compares these files to identify issued checks without a corresponding bank-cleared transaction.

---

How outstanding checks should be matched

A check should not be classified as outstanding merely because it does not appear in the same month's bank statement.

The reconciliation should search the available bank history using:

• Check number
• Amount
• Bank account

Where the check number and amount match in a later month, the check should be classified as cleared rather than outstanding.

The cleared date can then be used to calculate the number of days between issue and clearing.

---

Create an outstanding-check ageing report

Outstanding checks can be grouped by the number of days since they were issued.

A possible ageing structure is:

The appropriate categories may differ based on the firm's policies, account type, and circumstances.

Ageing allows reviewers to focus first on the oldest and highest-value checks.

---

Reasons a law firm check may remain outstanding

The recipient has not deposited the check

The recipient may still intend to deposit it.

This is common for recently issued checks.

The check was lost

The recipient may never have received the check or may have misplaced it.

The check was voided

The check may remain in the issued-check export even though it was later voided.

A replacement check was issued

The original and replacement checks may both appear in the internal data unless they are linked clearly.

The check number is incorrect

A data-entry error may prevent the check from matching against the bank transaction.

The bank history is incomplete

The available bank export may not cover the period in which the check cleared.

The check cleared under a different representation

The bank may display the check number differently or include it only within the transaction description.

The payment was recorded twice

A duplicate internal entry may create an apparent outstanding check even though the valid payment cleared.

---

Review high-value and old checks separately

Not all outstanding checks require the same level of attention.

The firm may prioritize checks based on:

• Age
• Amount
• Payee
• Bank account
• Matter or case
• Payment purpose
• Check status
• Whether a replacement was issued

A high-value check outstanding for several months may require more immediate review than a recently issued low-value check.

---

Track voided and replacement checks

Voided and replacement checks should not remain mixed with ordinary outstanding checks.

Where possible, retain:

• Original check number
• Void date
• Replacement check number
• Replacement issue date
• Original payee
• Original amount
• Reason for replacement
• Final clearing status

This helps prevent the original and replacement checks from being investigated independently as unrelated exceptions.

---

Review bank-only checks

Outstanding-check reconciliation should also examine the opposite side.

A check may appear in the bank data but not in the firm's issued-check register.

These transactions may arise because:

• The internal export is incomplete
• The check was created outside the standard process
• The check number was entered incorrectly
• Another system was used
• The transaction belongs to another account
• Historical data is missing

Bank-only checks should be reviewed separately from outstanding issued checks.

---

Why spreadsheets become difficult

Excel can be used to search for check numbers and compare amounts.

However, the process becomes harder when:

• Several years of data are involved
• Check numbers contain formatting differences
• Duplicates exist
• Multiple bank accounts are included
• Checks clear in later periods
• Replacement checks must be tracked
• The reconciliation must be repeated monthly
• Review notes and statuses must be maintained

A saved reconciliation configuration reduces the need to rebuild formulas for every period.

---

Outstanding check reconciliation with Cointab

Cointab can compare a law firm's issued-check register against cleared bank transactions.

The output can identify:

• Recently outstanding checks
• Long-outstanding checks
• Matched checks
• Amount differences
• Checks found only in the bank
• Duplicate check numbers
• Other exceptions based on the firm's requirements

The reconciliation can also preserve issue dates and cleared dates so that outstanding periods can be calculated.

Once configured, the same process can be reused every month.

---

Frequently asked questions

Is every issued but uncleared check outstanding?

Yes, based on the available data. However, the reason may be normal timing, incomplete bank history, a void, or another data issue.

How long can a check remain outstanding?

The answer depends on the circumstances, account, institution, and applicable procedures. Older checks should be reviewed based on the firm's own policies and professional guidance.

Should voided checks be included?

Voided checks should be retained for reference but classified separately from checks that are still expected to clear.

What happens when an old check clears later?

The check can be matched in a later reconciliation period and removed from the outstanding list.

Can outstanding checks be carried forward every month?

Yes. Unresolved checks can remain open and be checked against subsequent bank activity.

Can outstanding checks be reconciled across several years?

Yes, provided the check register and bank transaction history are available.

---

Maintain a clear outstanding-check list

An outstanding-check list should not be a static spreadsheet that grows indefinitely.

Each check should have a clear status, age, and review outcome.

A structured reconciliation allows the firm to separate:

• Newly outstanding checks
• Older unresolved checks
• Voided checks
• Replacement checks
• Amount differences
• Bank-only transactions

Cointab helps law firms create and maintain this process using repeatable matching rules and reviewable exception reports.