Outstanding Checks vs Deposits in Transit: Add or Subtract?

Outstanding checks and deposits in transit are the two timing differences that make your bank statement and your books disagree even when nothing is wrong. An outstanding check is money you have already recorded as paid that has not cleared the bank yet. A deposit in transit is money you have already recorded as received that the bank has not processed yet. On a bank reconciliation you add deposits in transit to the bank balance and subtract outstanding checks from the bank balance.

Last updated July 2026.

That one sentence answers the question most people are actually asking, but the reason it works is worth understanding, because it is the same logic behind every adjustment on a reconciliation. Both items exist because your books and the bank are keeping time differently. You record a transaction the moment it happens. The bank records it the moment cash actually moves through its system, which can be days later. The gap between those two moments is where outstanding checks and deposits in transit live.

What is the difference between outstanding checks and deposits in transit?

The difference is direction. An outstanding check is a payment you sent that the recipient has not cashed or deposited yet, so it has left your books but not the bank's. A deposit in transit is money you received and recorded that the bank has not posted yet, so it has entered your books but not the bank's. Both are already in your general ledger; neither has reached the bank statement. That is what makes them timing differences rather than errors.

Because both are already in your ledger and neither is on the statement yet, you never touch the book balance for them. You adjust the bank side of the reconciliation to catch it up to what your books already know.

Do you add or subtract outstanding checks in a bank reconciliation?

You subtract outstanding checks from the bank statement balance. The check reduced your book balance the day you wrote it, but the bank still shows that cash sitting in the account because the check has not cleared. So the statement overstates your real cash. Subtracting the outstanding checks brings the bank balance down to the amount that will actually be there once the checks clear, which is what your books already reflect.

Are deposits in transit added or subtracted?

You add deposits in transit to the bank statement balance. You recorded the deposit as cash received, but the bank has not posted it yet, so the statement understates your real cash by that amount. Adding the deposit in transit raises the bank balance to include money that is genuinely yours and already in your books, just not yet reflected on the statement.

A useful rule of thumb: outstanding checks and deposits in transit are things the bank does not know about yet, so you fix the bank side. Fees, interest, and returned checks are things you did not know about until the statement arrived, so you fix the book side. Adjust the two sides toward each other and they should meet.

A worked example

Say the bank statement shows an ending balance of $12,400. Your general ledger cash account shows $11,950. They do not match, so you work through the differences.

The adjusted bank balance of $11,950 now equals the book balance of $11,950, so the account is reconciled. The $450 gap you started with was entirely timing: one deposit the bank had not posted and two checks nobody had cashed. Nothing was wrong; the two records were simply looking at different moments in time.

What is a deposit in transit?

A deposit in transit is cash or checks you have received, recorded in your books, and sent to the bank, but which the bank has not yet added to your account as of the statement date. It usually happens with deposits made near the end of a period, after the bank's daily cutoff, or over a weekend. The money is real and it is yours; it just crosses the statement date before the bank processes it, so it shows on your next statement instead.

What is an outstanding check?

An outstanding check is a check you have written and recorded as a payment that the payee has not yet cashed or deposited, so it has not cleared your bank. Until it clears, the bank still counts that cash as available even though you no longer do. Outstanding checks are the single most common reconciling item for businesses that still pay by check, and a growing pile of them is worth watching.

How long can a check stay outstanding?

Most checks in the United States are considered stale-dated after six months, meaning banks may refuse to honor them, though they are not required to refuse. A check that stays outstanding for months usually means the payee lost it, forgot it, or never received it. Once a check is genuinely stale, you generally void it, add the cash back to your books, and, where unclaimed-property rules apply, track it for escheatment rather than quietly keeping it. Letting old outstanding checks linger distorts your cash position and is a common source of reconciliation drift.

Why do outstanding checks and deposits in transit happen?

They happen because recording a transaction and settling it at the bank are two separate events with a gap between them. You book a payment the day you cut the check, but the payee controls when it clears. You book a receipt the day the money arrives, but the bank controls when it posts. Cutoffs, weekends, holidays, mail, and mobile deposit delays all widen that gap. This is normal and expected; the reconciliation exists precisely to account for it. Problems start only when items sit unreconciled for months, which usually points to a lost check or a deposit that never actually landed.

How do you record outstanding checks and deposits in transit?

You do not make a journal entry for either one. Both are already in your books, so there is nothing to record; you simply list them as reconciling items that adjust the bank balance. That is the key point people miss. Only items that surface on the statement and are not yet in your books, such as bank fees, interest, and returned checks, get a journal entry. Outstanding checks and deposits in transit are carried forward on the reconciliation until they clear, at which point they drop off on their own.

If you find a deposit or a check that is genuinely missing from your ledger rather than just uncleared, that is a different problem, and our guide to common causes of reconciliation discrepancies walks through how to tell timing differences from real errors. Teams reconciling inside QuickBooks who need to bring in transactions the bank sent as a file can turn a bank CSV export into an importable QBO file so nothing is keyed by hand and no receipt gets missed.

How software handles this automatically

Reconciliation software tracks outstanding checks and deposits in transit for you by comparing what is in your ledger against what has actually cleared the bank, then carrying the uncleared items forward automatically until they settle. That removes the manual list most teams keep in a spreadsheet, and it flags an item that has been outstanding too long instead of letting it hide. This only works if the cleared side arrives on its own, which is what a direct bank feed connection is for: the statement lines land daily rather than being downloaded once a month, so an uncashed check is visible the week it goes stale instead of at the next close.

Reconciler does exactly this. It connects your bank feeds, corporate cards, and payment processors alongside your QuickBooks, Xero, NetSuite, Sage Intacct, or Business Central ledger read-only, matches both sides on amount, date, memo, and reference, and explains every match in plain English. Items that have not cleared show up as open reconciling items rather than surprises, and a stale outstanding check gets surfaced instead of buried. It never moves money and never posts an entry on its own, so a person reviews every exception. The bank reconciliation software page shows how the matching and the exception list work, and the step-by-step guide to reconciling a bank statement puts these adjustments in the full monthly sequence. If you are formalizing the whole close, the month end close checklist shows where the bank reconciliation sits among the other period-end tasks.

None of this is financial or tax advice. Rules on stale-dated checks and unclaimed property vary by state, so confirm the specifics for your situation with your accountant.