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Record Non-Sufficient Funds (NSF), or bounced checks, from customers

This article discusses how to handle checks that are returned due to lack of funds in a customer's account (bounced checks).

Detailed Instructions

 QuickBooks 2014 and Enterprise Solutions14.0:

QuickBooks 2014 includes a new feature to easily process bounced checks.

QuickBooks 2013 and earlier:

  1. Create items for tracking bounced checks and their associated charges if these items do not already exist in your company data file (otherwise, skip to step 2):
    1. Choose Lists > Item List.
    2. Click the Item drop-down arrow and select New.
    3. Click the Type drop-down arrow and select Other Charge, and then type a name this item (for example, "Bad Check").
    4. Leave 0.00 in the Amount or % field, and then click the Tax Code drop-down arrow and select Non.
    5. Click the Account drop-down arrow and select your bank account.
    6. Click Next.
    7. Create a second item named "Bad Check Charge" or something similar by repeating steps 1.c and 1.d (This is for the service charge you will assess customers for bounced checks when you send them another invoice.)
    8. Click the Account drop-down arrow and select an income account (such as Returned Check Charges). If the account does not exist, click the drop-down arrow and choose Add New, and add the new income account.
    9. Click OK to save both items.

  2. Record your bank's charges for a bounced check:
    1. Choose Banking > Use Register. If prompted, select the appropriate bank account and click OK.
    2. Create a new transaction, naming the Payee as "NSF Fee" or something similar. (If the name is not found, use Quick Add and then select Other as the type then click OK.)
    3. In the Account field, enter the income account you used in step 1.h.
    4. In the Payment field, enter the bank charge amount .
    5. If desired, enter a memo, and then click Record.

  3. Record a credit memo to reverse the original sale:
    1. Choose Customers > Create Credit Memo/Refunds.
    2. Enter all of the items from the original invoice or sales receipt, including the sales representative and sales tax, if applicable.
    3. Enter one more line item called Bad Check line item from step 1.c with a negative amount matching the original invoice amount. This amount should match the total of all the items on the credit memo, making the total $0.
    4. Click Save & Close to record the credit memo.
    5.  

  4. Choose Customers > Create Invoices to send the customer a new invoice that should include all of the items from the original invoice, plus a line item for Bad Check Charge created in step 1.g.
    • If the original transaction was a statement charge, print a new statement charge.
    • If the original transaction was a sales receipt, recreate an invoice to send to your customer.

Tip: QuickBooks Pro, Premier, and Enterprise Solution versions have a "bounced check" letter that you can send in addition to the new invoice. For more information, select Help menu and select Help Index, and then type Microsoft Word letters, about (QuickBooks 2005 and earlier type letters, creating.)

If these steps do not resolve the issue, you can read discussions and post messages and questions relating to your issue on the Intuit QuickBooks Community site for free or you can contact a technical support agent for additional guidance. Fees may apply.

KB ID# HOW12221
4/23/2014 5:38:39 PM
QYPPRDQBKSWS06 9102 Pro 2013 6e7351