Outstanding checks and deposits in transit are timing differences between a client's books and the bank statement. An outstanding check has been written and recorded but not yet paid by the bank. A deposit in transit has been recorded but not yet credited. On a reconciliation, deposits in transit are added to the bank balance and outstanding checks subtracted.
What are outstanding checks?
Outstanding checks are checks the client has written and recorded in the books that the bank has not yet paid by the statement date. They are not errors. A check has to reach the payee, be deposited and travel back to the client's bank before it clears, and that takes days or sometimes weeks.
IRS Publication 583 gives a practical definition in its section on reconciling the checking account. After the checks the bank has paid are marked off in the checkbook, the ones not marked are the outstanding checks. The definition works from the client's own records outward, which is why the list has to be rebuilt each month.
Checks written near the end of a month are the usual source. A client who pays suppliers on the 29th will have most of those checks outstanding on a statement that closes on the 31st. Those checks are expected to clear in the first week or two of the next month.
An outstanding check stays on the reconciliation every month until the bank pays it. That is the useful property: a check that keeps reappearing is visible, month after month, without anyone having to remember it.
What is a deposit in transit?
A deposit in transit is money the client has recorded as deposited that the bank has not credited by the statement date. It usually happens at month end. A deposit recorded on the 31st and taken to the bank on the 1st appears in the books for one month and on the statement for the next.
Publication 583 names the same cause. It says a statement may not include deposits made after the statement date, which is one reason the statement and checkbook balances differ.
A deposit in transit should clear within a few days. Unlike checks, which depend on a payee choosing when to deposit them, deposits are in the client's own hands. A deposit still "in transit" two weeks into the next month is a reason to ask questions. It may have been recorded but never made, made to a different account, or entered twice.
Treat each deposit as the bank will show it. If the client recorded three customer payments separately but took them to the bank together, the deposit in transit is the one combined total.
Timing items in the adjusted bank balance
Timing items adjust the bank side of a reconciliation, never the books. Deposits in transit are added to the statement's ending balance, because the money belongs to the client and the bank will credit it soon. Outstanding checks are subtracted, because that money is already committed and the bank will pay it soon.
No ledger entry follows from either one. The books already have them. The bank catches up on its own in a later period, which is what makes them timing items rather than adjustments to the books.
Example: four timing items across several months
This example uses a fictional client, Juniper Hollow Farm, with a checking account ending XXXX-1735. The amounts and dates are made up for the example. All dates are in 2026.
| Item | Amount | Written or recorded | Cleared at bank | Reconciling item on |
|---|---|---|---|---|
| Check #4418 | 1,250.00 | Jan 29 | Feb 4 | January |
| Deposit | 3,400.00 | Jan 31 | Feb 2 | January |
| Check #4431 | 86.40 | Feb 26 | Apr 9 | February and March |
| Check #4402 | 510.00 | Jan 12 | Not cleared by Jun 30 | January through June |
The first two rows are routine: each appears on one reconciliation and is gone by the next statement. Check #4431 carried across two month ends, which is still within normal range for a small payment a payee was slow to deposit. Check #4402 is the one to look at, and the next section covers why.
The full layout of the bank side and book side, with fees and interest, is set out in the adjusted bank balance and adjusted book balance. How often to run that schedule depends on the client's volume, which how often to reconcile bank accounts compares.
Stale outstanding checks and deposits that never clear
A stale outstanding check is one that has stayed uncleared long enough that it may never clear. A deposit that never clears is more serious, because it suggests the money never reached the bank. Either way, a timing item that stops behaving like a timing item has become something to investigate, not something to carry forward again.
For checks, six months is a common marker. The CFPB's answer to whether a bank can refuse to cash a check more than six months old calls such checks stale, and says a bank may choose to honor one but federal law does not require it to. Check #4402 in the example passes six months in July.
An old outstanding check has a few likely explanations. The payee may have lost it. It may have been voided and reissued without the original being voided in the books. It may have been recorded but never sent. Each one leaves the books showing less cash than the bank holds, so the client should be asked what happened to it.
A check that was truly owed and never cashed can also raise an unclaimed property question. The California State Controller's page on reporting unclaimed property says businesses and other holders report property that has stayed unclaimed for the required dormancy period, generally three years. Rules differ by state, so the answer depends on where the client is.
For deposits, the fix is quicker. Ask the client for the deposit receipt and check whether it went to another account. A deposit still missing after that is usually a bookkeeping error, and the guide to bank reconciliation errors covers how to trace one.
Old items left by a previous bookkeeper deserve the same treatment as new ones. A list of outstanding checks that only grows makes every later reconciliation harder to read. Statements and ledgers that are complete for the year make that clean-up possible; the financial statements and ledgers category covers working with the books themselves.
Before any of this, the statements have to be in hand. Schema CPA reads each statement a client sends and flags a month that breaks the run of balances, so the reconciliation starts with every month present. The document categories on the homepage list the statements it reads.