When a customer's check is returned for insufficient funds, tell QuickBooks that the check bounced.
To do this task
On the Home page, click the Receive Payments icon.
Click Previous until you see the transaction, or use another method to find the payment.
Click the Bounced Check button.
Next to Bank fee charged to you, enter the amount your financial institution charged you for the bounced check.
If you want to charge your customer for bouncing the check:
Next to Charge customer for fee? select Yes.
Enter the total amount you want to charge your customer. For example, if your financial institution charged you a $30 fee, and you want to charge your customer an additional service fee of $25, you would enter $55.
If you don't want to charge your customer, select No.
Click Save & Close.
Important: If you charge your customer a fee for bouncing the check, QuickBooks creates an invoice for the fee, which you can edit. This invoice doesn't include the amount of the original invoice. Therefore, we recommend that you send your customer the invoice and a statement, which will include both the amount of the original invoice and the additional fee. Later, when the customer pays you, receive the payment and apply it against both invoices.
When a customer's check is returned for insufficient funds, use a workaround to handle the bounced (NSF) check.
Create items for tracking bounced checks and their associated charges
(a one-time setup task).
Choose Lists > Item List.
Click Items at the bottom of the list and then click New.
Create an Other Charge item titled "Bounced Check."
In the Amount field, leave a zero amount.
From the Tax Code list, choose Non.
In the Account field, choose your bank account (for example, Checking).
Create a second Other Charge item titled "Bad Check Charge" for the
service charge you assess customers for bounced checks.
Use this item when you reinvoice the customer to recover the service charge.
In the Account field, choose an income account, such as Returned Check Charges.
If the account doesn't exist, set it up now.
Use the items created in step 1 to reinvoice the customer for the
bounced check, plus any bank fees you want to recover. This step also backs out the
original transaction on your books.
Choose Customers > Customer Center.
On the Customers & Jobs tab, select the customer with the bounced check.
Right-click and choose Create Invoices.
For the first line item on the invoice, use the Bounced Check item
for the amount of the bad check.
Note: Because this item is linked to your bank account, this will reduce your
bank account by the amount of the bounced check, thereby backing out the original transaction on your books. The income for the original sale will be recorded when you receive the new
For the second line item on the invoice, use the Bad Check Charge item
for the amount of any bank fees that you want to recover.
Create an invoice as usual.
(Optional) QuickBooks has a Bounced Check letter that you can send along with
the new invoice.
Select the customer in the Customer Center.
Go to the Word menu at the top of the Customer Center and click Prepare Letter to Customer.
Follow the onscreen instructions in the Letters and Envelopes wizard.
In the Choose a Letter Template window, choose Bounced Check.
Enter your bank's bounced check charge when you reconcile your bank statement.
When you reconcile your bank statement:
Include your bank's charge for the bounced check in the Service Charge field.
In the Service Charge Account field, enter an expense
account (for example, Bank Service Fees or Returned Check Charge).
Write letters in Microsoft Word using QuickBooks data
Write off bad debt