Bounced / Returned Check / NSF

Bounced / Returned Check / NSF (Non-Sufficient Funds)

If you've recorded a customer payment in the Receive Payment/Customer Payments window and the customer's check bounces there are different ways to handle the situation depending on the result we want.

To Leave the Invoice Open and Awaiting Payment
To Close the Invoice Because It Will Not Be Paid

To leave the invoice open and awaiting payment

  1. Go to Setup from the menu bar at the top of the screen
  2. Choose "Preferences" from the menu
  3. Click on the "Security" tab on the far right
  4. Make sure that the top box reading "Transactions CAN'T be changed; they must be reversed" is checked. Click okay.
  5. Go to "Banking" and click on the "Bank Register" button
  6. Select the account which the bounced check was deposited to from the drop down menu.
  7. Put in the correct date range so that the bounched check will show up.
  8. Click the drill down arrow next to the check that bounced.
  9. Choose "Edit" from the menu bar at the top of the screen
  10. Choose "Reverse Payment"
  11. Click "Record" to record the reversal
  12. The invoice will be left open (if you want to assess a fee for the bounced check click here)
  13. If you would like to change the preference to allow you to change transactions - go back to Setup > Preferences > Security and uncheck the box next to "Transactions CAN'T be changed; they must be reversed." Click okay.
  14. When you receive a new payment from the customer you receive it like normal - applying it to the open invoice (and the associated fee if you chose to charge one)

To close the invoice because it will never be paid

Follow steps 1-13 listed above. See this article for how to handle Bad Debt.

Bounced Check Fee

NOTE: A fee for a bounced check could be charged to a customer. Consult with your accounting professional to determine what account to use to record bank fees charged and fees collected from your customer.

If you decide to charge for the bounced check you can do so by either adding it as a line item to your original invoice or alternatively creating a sale for the fee alone. If you would like to create a new sale for the fee alone:

  1. Go to "Sales" and click the "Enter Sales" button
  2. Select the customer you would like to charge
  3. Click "Layout" at the bottom of the invoice and switch this to "Service"
  4. Enter in the description "Bounced Check Fee"
  5. Select an account to record this to (usually an income account but consult your accounting professional)
  6. Enter in the dollar amount that you are going to charge for the bounced check
  7. Click record