How to handle Non-Sufficient Funds (NSF) or bounced checks from customers?

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      You can record non-sufficient funds or bounced checks from the customers with the record rebounced feature or by manual process. Bounced check transactions are sent to keep your account balanced and well-documented.

      Things to keep in mind

      • Record rebounced feature can only be used in single user mode and only applies to payments done through a customer window.
      • If you have a returned ACH item, switch the payment type to verify before following the steps. If the payment method is blank or you’re unable to follow the steps proceed to Option 2.

      Option 1: By record bounced check feature

      • Go to the customer’s menu and select the customer center.
      • Select the transaction tab and choose received.  
      • Double-click the payment you want to record as non-sufficient funds.
      • Go to the receive payment window, click on the record bounced check icon on the main ribbon tab.
      • Enter the following information on the manage bounced check window and select next. Note: All these fields are optional. You can leave them blank if there are not any additional charges from the bank or you don’t want to charge your customer for it.
        • Bank fee date
        • Expense account for the bank fee
        • Class
        • Customer fee (how much you want to charge the customer).
      • Quickbooks will show you the bounced check summary, for you to know what will happen behind the working area. For example, you may see:
        • The following invoices that will be marked unpaid.
        • The following fees will be deducted from your bank account
        • This invoices will be created for the fees you will charge your customer.
      • Select finish.

      Option 2: By manually recording the bounced check

      • First, create an item and an income account so that you could track bounced checks and their associated charges.
      • Reverse the original payment by creating the journal entry.
        • Go to the company menu and select make general journal entries.
        • Go to the general entries window, debit your account receivables for the same amount of the NSF check.
        • Go to the memo column and enter a note there(that describes the transaction).
        • Choose the name of the customer or job associated with the NSF check, which is under the name column.
        • Credit the bank account that received the original deposit.
        • Click save and close.
      • Switch the payment for the invoice to reverse journal entry.
        • Go to the reports menu, select customers receivables, select customer balance detail.
        • Double click on the original payment line for the NSF transacion.
        • Go to receive payment window, move the check mark from the invoice to the reversing journal entry.
        • Click save and close.

      Important: This will deduct your bank account by the amount of the bounced check. The invoice(the bounced check came from) will be marked unpaid.

      • Resend open invoice(this is optional)
        • move to the invoice where the bounced check originated.
        • Add the item Bad Check Charge that you have created in step 1.
          Note: You can skip this step if there weren’t any additional charges from the bank or if you don’t want to charge your customer for it.
        • Select the Email icon which is on the Main ribbon tab, then click to Send.

       

      Answered on July 10, 2019.
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