It’s easy to lose track of a cheque once it’s in the mail, but outstanding checks are anything but old news in Australia’s evolving financial landscape. With more Aussies relying on digital banking and fast payments, the humble cheque might seem outdated—yet, for many businesses and individuals, it remains a regular part of managing finances. Understanding how outstanding checks work, their risks, and how to handle them is crucial in 2025, especially as payment systems and regulations continue to shift.
What Exactly Is an Outstanding Check?
An outstanding check is a cheque you’ve written and recorded in your books, but which hasn’t yet been cashed or cleared by the recipient’s bank. Until the funds are withdrawn, the money technically still sits in your account, but it’s as good as gone. This can lead to confusion, overdrafts, or even bounced payments if you forget to account for these pending withdrawals.
In Australia, while cheque use has fallen sharply—down another 25% year-on-year according to the Reserve Bank of Australia’s 2024 payments report—millions of cheques are still processed annually. Outstanding checks are most common in:
- Small business supplier payments
- Property settlements
- Refunds and rebates from utilities or insurers
- Trust and legal disbursements
With the RBA signalling a phase-out of cheques by 2030, keeping tabs on outstanding checks is more important than ever to avoid unexpected shortfalls or administrative headaches.
Why Outstanding Checks Can Cause Financial Pain
Outstanding checks can quietly undermine your financial planning. Here’s how:
- Overstated Bank Balances: If you forget about a large uncashed cheque, your online account balance may appear healthier than it really is, making you vulnerable to overdrafts if other payments hit.
- Bounced Payments: Writing new cheques or making purchases based on your current balance could lead to dishonoured transactions if a large outstanding cheque is suddenly presented.
- Accounting Complications: For businesses, outstanding checks can distort cash flow reports and make reconciliations a nightmare at tax time.
In 2025, with digital payment rails like PayTo and Osko widely adopted, many banks have shortened cheque clearance periods (now typically two to three business days). However, the risk of dormant or forgotten cheques remains. A forgotten $2,000 supplier cheque could still bounce months later, triggering late fees or strained relationships.
How to Manage Outstanding Checks in 2025
With cheque usage shrinking but still present, a few proactive steps can help keep your finances on track:
- Regularly Reconcile Your Accounts: Match your cheque register or accounting software against your bank statements every month. Flag any cheques that haven’t cleared within 30 days.
- Follow Up Promptly: If a recipient hasn’t cashed a cheque after several weeks, reach out to check if it was received. Lost cheques may need to be stopped and reissued (note: banks may charge a stop payment fee, often $15–$25).
- Communicate with Your Bank: If you suspect fraud or a cheque was stolen, contact your bank immediately to place a stop on the payment.
- Shift to Digital Payments Where Possible: Take advantage of NPP-powered options like PayID or Osko for instant, traceable transfers—eliminating the risk of outstanding checks altogether.
- Stay Up to Date with Policy Changes: In 2025, some banks have introduced auto-expiry features for cheques after 15 months, and new reporting obligations for unclaimed funds. Review your bank’s policies regularly.
For businesses, most cloud-based accounting platforms now offer automated reconciliation tools that flag outstanding cheques, making it easier to spot issues before they become problems.
Outstanding Checks and Tax Time: What to Watch For
With the ATO tightening rules around unclaimed money and trust account reconciliation, outstanding checks can have tax implications, especially for businesses and sole traders. Funds from cheques uncashed for over 15 months may need to be reported and remitted as unclaimed money. Auditors are also scrutinising outstanding cheques more closely as part of year-end reviews.
Best practice for 2025:
- List all outstanding cheques as liabilities in your end-of-year accounts
- Chase up any cheques older than 90 days
- Document all communication with payees about uncashed cheques
Neglecting outstanding checks can lead to compliance issues or even fines, particularly in regulated sectors like real estate or law.
Conclusion
While the era of paper cheques is drawing to a close, outstanding checks remain a surprisingly common and disruptive financial pitfall in 2025. A little diligence—regular account reconciliation, prompt follow-up, and a move to digital payments—can help you avoid costly surprises and keep your finances running smoothly. Don’t let an outstanding cheque catch you off guard.
