When Do Business Checks Expire and What to Do

Business checks remain a common method for transactions, even with the rise of digital payments. Businesses frequently use checks for various purposes, including paying vendors, employees, and other operational expenses. Understanding the lifespan and validity of these checks is important for effective financial management and avoiding potential complications.

Check Validity and Stale-Dating

Checks generally do not have a hard expiration date, but they can become “stale-dated” after a certain period. The Uniform Commercial Code (UCC) Section 4-404 states that banks are not obligated to pay a check, other than a certified check, presented more than six months after its date. This six-month timeframe is a widely accepted guideline across the United States. While a check being stale-dated means a bank is not required to honor it, it does not automatically invalidate the underlying debt or payment obligation.

Banks retain discretion to pay checks presented beyond this six-month period. A bank’s decision to process a stale-dated check often depends on factors such as whether the account is still open and in good standing, if sufficient funds are available, and if there is no stop payment order in effect. Some business checks may even have “void after 90 days” printed on them.

What to Do with Stale-Dated Checks

For a recipient holding a stale-dated check, the recommended course of action is to contact the issuer immediately. The issuer can then provide a new check to replace the old one, resolving the issue efficiently. Attempting to deposit a stale-dated check without prior communication carries the risk of the check being returned, potentially incurring a fee from your bank.

For businesses that have issued checks that become stale-dated, it is advisable to periodically review bank statements for outstanding checks. If an issued check has not been cashed after several months, contacting the payee can prevent future complications. Before reissuing a new check, place a stop payment order on the original stale-dated check to prevent accidental double payment.

Broader Implications for Businesses

The underlying financial obligation associated with a check does not expire just because the check itself becomes stale-dated; the issuer still owes the money. State escheatment laws require businesses to eventually surrender unclaimed funds, including uncashed checks, to the state after a dormancy period, typically several years. This highlights the importance of addressing stale checks promptly.

Banks have varying policies regarding stale-dated checks, even with the UCC guideline. While the six-month rule is common, it is generally beneficial for recipients to deposit checks promptly to ensure timely access to funds and avoid potential issues. Mobile deposit and other digital tools facilitate quick and convenient check deposits, reducing the likelihood of a check becoming stale.

Effective record-keeping is also important for managing checks. Businesses should maintain detailed records of all issued and received checks, including check numbers, dates, payees, and amounts. These records help in tracking outstanding payments and identifying checks that might be approaching stale-dated status. A stop payment order can be placed on a check.