Stale Cheque Accounting

A stale cheque is a cheque that was issued or received but was not presented and cleared within its validity period. In ERPNext, you can identify these cheques from the cheque/reference details on the Payment Entry and from the missing clearance date in Bank Clearance.

Use stale cheque accounting when the original cheque should no longer be treated as an active bank transaction. The accounting treatment depends on whether the cheque was issued to a supplier or received from a customer.

When to Use This

• The cheque/reference date is older than the validity period followed by your bank or company.
• The Payment Entry has no clearance date.
• The cheque still appears as uncleared in Bank Clearance.
• You need to reverse the old bank impact and issue or receive a fresh payment.

1. Identify the Stale Cheque

Open the original Payment Entry and review the cheque details. Check the Cheque/Reference No, Cheque/Reference Date, and Clearance Date. If the clearance date is blank and the cheque has crossed its validity period, it should be reviewed as a stale cheque.

Payment Entry showing cheque reference details and a blank clearance date

In this example, Payment Entry ACC-PAY-2024-00005 has cheque/reference number 6785464 dated 07-02-2024, and the clearance date is blank. If this cheque expired without being cleared by the bank, it should not remain open as a pending bank transaction.

2. Review the Cheque in Bank Clearance

Go to Bank Clearance and select the bank account and date range for the cheque. Click Get Payment Entries to review uncleared entries. Check the Cheque Number and Clearance Date columns.

Bank Clearance showing cheque number and clearance date columns

Do not enter a clearance date for a cheque that did not actually clear. If the cheque is stale, reverse the accounting impact instead of marking it as cleared.

3. Reverse the Accounting Impact

Create a Journal Entry to reverse the original bank impact when the original Payment Entry should not be cancelled or when the accounting period is already closed. Use the same amount as the stale cheque and add the original Payment Entry reference in the remarks.

Journal Entry screen used to record the stale cheque reversal

For an issued cheque, reverse the bank credit and restore the payable or liability:

• Debit the bank account.
• Credit the supplier payable account or relevant liability account.

For a received cheque, reverse the bank debit and restore the receivable:

• Debit the customer receivable account or relevant debtor account.
• Credit the bank account.

Use the Reference Number, Reference Date, and User Remark fields to record the original cheque number, cheque date, Payment Entry, and reason for reversal. Save and submit the Journal Entry after review.

4. Issue or Record the Fresh Payment

If the supplier still needs to be paid, create a new Payment Entry with the new cheque or reference number. If a customer gives a replacement cheque or makes a fresh payment, record a new received Payment Entry. Reconcile the new transaction only after it clears the bank.

Notes

• Use cancellation and amendment only if your workflow and accounting period allow it.
• Use a Journal Entry when the original Payment Entry must remain submitted for audit or period-control reasons.
• Keep the original cheque number, cheque date, and Payment Entry number in the remarks for audit trail.
• Apply the same cost center, project, finance book, and accounting dimensions used in the original entry, if applicable.
• Record bank charges separately if the bank has charged any fee related to the stale cheque.
• If the cheque clears unexpectedly after reversal, confirm with the bank before reversing the stale cheque adjustment.