Escheatment for Accounts Payable: What to Do With Uncashed Vendor Checks

Escheatment is the transfer of unclaimed property, including uncashed vendor checks and unused vendor credits, to a state after a set dormancy period. The business holding the money has to find it, try to reach the owner, and then report and remit it.

AP owns much of that problem because AP issues the checks. Every check a vendor never cashes sits on the outstanding list until someone works it, and the rules for working it differ by state. State rules quoted below come from official state sources. None of it is legal advice. Check your own state administrator's guidance, or ask counsel, before you act on a specific item.

Key Takeaways

• Escheatment moves unclaimed property, such as uncashed vendor checks, to the state once a dormancy period ends and the holder has reported it.

• Nothing escheats on its own. The holder must identify dormant items, contact owners, report, and remit.

• Dormancy periods and deadlines vary by state, and some states, including New York and Delaware, give no business-to-business exemption.

• Voiding an old check doesn't remove the obligation to the vendor or the state.

• Paying vendors electronically means fewer payments can go uncashed in the first place, though it won't eliminate unclaimed property.

What is escheatment?

Escheatment is the legal process by which unclaimed property passes to a state when its owner can't be found. A business that holds money owed to someone else, called the holder, must report and remit that money to the state once the property has been dormant long enough.

Three parties are involved. The owner is the vendor or person who is owed the money. A holder is the business that owes it, such as the company that wrote the vendor check. Once the property is reported, the state takes custody once the property is reported and holds it for the owner to claim. In most cases, the owner can still claim the money from the state later.

Most unclaimed property belongs to consumers, but the scale is real. The National Association of Unclaimed Property Administrators reported in its October 2024 annual report release that state programs returned $4.49 billion to owners in fiscal year 2024. The same release says the average claim paid through MissingMoney.com was $2,080, the median was $100, and roughly 1 in 7 Americans have unclaimed property.

You'll also see "escheatment" used in investing, for dormant brokerage accounts, and in consumer banking. The mechanics are similar, and for AP the property is almost always money owed to vendors.

What counts as unclaimed property in accounts payable?

In AP, unclaimed property usually means money owed to vendors that they haven't collected. The most common items are:

• Uncashed vendor checks.

• Unapplied vendor credits and credit balances.

• Overpayments a vendor never asked to have refunded.

• Refunds due to vendors that were never issued or never cashed.

Uncashed payroll checks are unclaimed property too, but they usually sit with payroll rather than AP. Gift cards, customer credits, and securities each have their own rules.

How long until a vendor check escheats?

A vendor check typically escheats after a state-set dormancy period, which in New York is 3 years for vendor checks. Periods vary by state and property type, so confirm the rule for each state where you hold property.

The table below includes only rules confirmed from official state sources on October 15, 2026. For any other state, go to that state's unclaimed property administrator.

Sources: New York State Comptroller, Unclaimed Property Relating to All Business Entities: Reference Sheet, and Delaware Code, Title 12, Chapter 11, Subchapter II, both accessed October 15, 2026.

Both states are explicit about business-to-business payments. New York's reference sheet states that its Abandoned Property Law "does not provide an exemption for business-to-business transactions." Delaware's code says, "Nothing in this section shall be construed to create a business-to-business exemption of any kind." Many companies assume vendor checks are exempt because the payee is a business. In these two states, at least, they aren't.

Which state's rules apply?

Rules differ by state, and the owner's address on record usually matters in deciding which state gets the property. The exact priority rules are technical and can depend on the facts, so this is a question for your unclaimed property adviser or counsel.

The practical takeaway for AP is that clean vendor addresses matter. An outstanding check with a missing or outdated address is harder to resolve and may be reportable to a state you didn't expect. Good vendor management keeps addresses current, which helps both with reaching owners and with knowing where to report. When a vendor moves or merges, update the address in the vendor master right away, and keep the old one on file so you can show where the payment was originally sent.

What is the escheatment process for a business?

The escheatment process for a business has five steps, running from identifying dormant property and contacting owners to reporting, remitting, and keeping records. Nothing happens automatically, so a holder that skips the steps still owes the property.

A typical cycle for vendor checks runs like this:

1. Identify dormant items. Review the outstanding check list and vendor credit balances, and flag items that have passed or will pass the dormancy period before the report date.

2. Send due-diligence notices. Mail owners within each state's notice window, shown in the table above for New York and Delaware, and keep proof of what you sent.

3. Report. File the report with each state by its deadline, listing owners and amounts that remain unclaimed.

4. Remit. Send the money to the state with the report or as the state directs.

5. Keep records. Hold onto the supporting records. Delaware requires holders to keep records for 10 years after the report is filed.

The work in step 1 depends on how well AP handles old checks month to month. The guide to handling stale checks covers that routine, and accounts payable reconciliation covers how outstanding items get identified in the first place.

How should AP handle outstanding checks month to month?

Treat the outstanding check list as a monthly work queue, not a year-end report. The earlier AP reaches a vendor, the more likely the vendor remembers the payment and still has a working address and bank account.

A simple aging routine works for most teams:

• At 60 to 90 days, confirm with the vendor that the check arrived, and offer to reissue electronically.

• At six months, escalate to a second contact at the vendor and check the address on file.

• Before the dormancy date, move unresolved items into the formal due-diligence process.

• At every stage, log the attempt, the date, and the outcome.

Credit balances deserve the same attention. A vendor credit that sits unapplied for years is still money owed to that vendor. Applying it to an open invoice or refunding it promptly keeps it off the unclaimed property report entirely. Fewer checks means fewer to chase, and Corpay pays suppliers by virtual card, ACH, or check from one approval flow.

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Who should own escheatment inside the company?

Split it between AP and whoever files the reports, usually tax, compliance, or the controller's team. AP owns the day-to-day work of finding outstanding items and contacting vendors, because AP issued the payments and has the vendor relationships. The filing team owns the state-by-state rules, the reports, and the remittances.

Problems tend to start in the handoff. If AP voids old checks without telling the filing team, or the filing team never sees the credit balances, items fall through. A shared list of dormant items, updated monthly and reviewed together before each reporting season, keeps both sides working from the same numbers. Many companies also bring in an outside adviser for multistate filings, since the rules change and vary so much from one state to the next.

What records should AP keep?

Keep enough to show what you owed and what you did to reach the owner, along with what you reported. For each item, that usually means the original payment record, the void or reissue record, copies of due-diligence letters, and the report and remittance confirmation.

Delaware's retention rule, quoted above, is a useful benchmark even for companies that never file there. Records make audits shorter and cheaper. Without them, a state may estimate what you owe instead of counting it.

What happens if a company doesn't report?

A company that doesn't report can face audits, interest, and penalties, and in some cases states estimate what it owes. Delaware's code, for example, charges interest of 0.5% a month on unpaid amounts and adds penalties for late reports and late payment.

Audits are the bigger exposure. States can examine a holder's records going back years, and missing records make the result worse, since the state may estimate liability instead of counting it. An accounts payable audit of your own, done before a state's, is a good way to find gaps. A clear AP audit trail for each voided, reissued, or reported check is what lets you defend your numbers.

One common mistake makes this worse. Voiding an old check and writing the amount back to income doesn't clear the obligation. The vendor is still owed. Depending on the state and the age of the item, the state may also expect it on a future report, with the due-diligence steps that come first. Voiding without reporting can turn an uncashed check into an unreported one.

How do you avoid escheatment on vendor payments?

The honest way to avoid escheatment is to make sure the vendor gets paid. Keeping the money isn't an option, and the rules are designed to stop that. What AP can do is shrink the number of payments that go uncashed and resolve the ones that do before they go dormant.

A few habits do most of the work:

• Work the outstanding check list every month, not once a year.

• Contact the vendor as soon as a check passes a set age, such as 90 days, while the payment is still fresh.

• Reissue electronically when you reach the vendor, rather than mailing another check.

• Reconcile vendor statements regularly, so credit balances surface early. The guide to vendor statement reconciliation explains how.

• Pay electronically from the start wherever vendors accept it.

That last habit matters most, because a payment that arrives electronically can't sit uncashed in a drawer.

Vendors that insist on checks are worth a second conversation. Many asked for checks years ago and never revisited it, and some simply never received an offer to switch. A short enrollment push, explaining that electronic payment arrives faster and carries remittance detail, often moves more vendors than AP expects. The ones that still refuse are the ones to watch most closely on the outstanding list, since every check they receive can go uncashed.

Checks still make up a large share of B2B payments, though the share is falling. The Federal Reserve Bank of Cleveland's September 2026 brief on B2B payments found checks fell from 32% of B2B payments by number in 2015 to 13% in 2024, while ACH rose from 25% to 41%. Nacha's study on the drop in B2B check payments found B2B ACH payments rose 155%, from 2.9 billion in 2015 to 7.4 billion in 2024.

Checks hang on mostly because vendors ask for them. AFP's 2026 Payments Fraud and Control Survey Report found 72% of organizations that use checks plan to keep using them for the foreseeable future, and 68% of those cite vendor requirements as a reason. The same survey found paper checks were the payment method most targeted by fraud in 2025, cited by 58% of organizations.

Checks carry other costs too. According to the Federal Reserve's Federal Reserve Payments Study, U.S. check payments fell to 9.2 billion by number and $24.45 trillion by value in 2024, down 1.8 billion and $1.92 trillion from 2021. Each of those checks had to be printed, mailed, and tracked. The guide to the true cost of paper checks adds up the rest.

Mail theft is another reason to move. FinCEN's 2023 alert on mail theft-related check fraud reported more than 350,000 check-fraud suspicious activity reports in 2021, up 23%, and over 680,000 in 2022. A stolen check that never reaches the vendor can end up on the outstanding list, looking exactly like one the vendor forgot to cash. Corpay's single-use virtual cards are one such option, since a card payment can't sit uncashed in a drawer.

Does paying vendors electronically get rid of unclaimed property filings?

It reduces them, but it doesn't eliminate them. Electronic payments can't go uncashed, so the biggest source of AP unclaimed property shrinks. Credits, refunds, and electronic payments that come back undeliverable can still go dormant.

An ACH payment returned because a vendor closed its account, for example, puts the money back on your books, owed to a vendor you may not be able to reach. Unapplied credits and overpayments behave the same way regardless of how you pay. Even a mostly electronic AP team, then, needs a process to review credit balances and returned payments before they pass the dormancy period. The filings get smaller, and the habit still matters.

The federal government has made its own move away from paper, as the piece on the end of government paper checks explains. For a primer on the electronic options, see what an ACH payment is and how virtual card payments work.

How Corpay reduces uncashed vendor payments

Corpay's fully managed AP cuts down the number of vendor payments that can go uncashed, by moving suppliers to electronic payment and handling enrollment for you.

Corpay payments automation pays each supplier by virtual card, ACH, or check from one workflow. Supplier enrollment is part of the service, so more of your vendors receive electronic payments without your team chasing them. Corpay virtual cards are single-use virtual cards, and Corpay pays customers more than $800M in rebates each year.

Corpay connects through 100+ ERP integrations, including NetSuite, Sage Intacct, Business Central, and Acumatica, so payment records flow back to your system for reconciliation. Your company still owns its unclaimed property reporting, but there's less to report when fewer checks go out.

Frequently Asked Questions

What is the meaning of escheatment?

Escheatment means unclaimed property passes to a state when its owner can't be found after a dormancy period. For a business, it means reporting and remitting money it owes but couldn't deliver, such as uncashed vendor checks, to the state where the owner was last known.

How long does a company have to hold an uncashed check?

It depends on the state. New York's dormancy period for vendor checks is 3 years. Other states set their own periods by property type, so check each state's unclaimed property administrator for the rule that applies.

Can you write off an uncashed vendor check?

Not to income, in most cases. Voiding the check doesn't remove what you owe the vendor, and the amount may still be reportable to a state once it's dormant. Work with your adviser on how to account for it while you try to reach the vendor.

Do business-to-business payments escheat?

In many states, yes. New York and Delaware both state in their official sources that they provide no business-to-business exemption. Rules differ by state, so confirm the rule for each state where you hold property.

David Luther

Product Marketing Program Manager

David Luther, MBA is a product marketing program manager with years of experience in commercial banking, finance, and technology sectors, with research and writing appearing in financial publications.

Payments Automation

AP Automation