It would be great if every transaction was quick, simple and easy. However, we live in an imperfect world. There is a chance that once in a while, a customer’s payment will bounce. Before the bounced check, your QuickBooks records showed that the Customer’s balance was zero. Now his balance has changed. Next time this happens to you, try this four step process.
First, you must remove the payment from your bank account because your bank will reduce your account by the amount of the check. Do this by recording a check. For the check number, enter NSF Check. Date the check the same date that the bank debits your account. Make the check payable to the Customer. Make the amount the same amount as the bounced check. Enter the account for the transaction as Accounts Receivable. This brings your Customer’s balance back to what he owed before the bounced check.
Usually, the bank will charge you a fee for the bounced check. You need to record this in your books. Do this by recording another check. For the check number, enter NSF Fee. Date the check the same date that the bank debits your account. Make the check payable to your Bank and for the amount of the Bank Fee. Enter the account for the transaction as Bank Service Charge. These two steps will cause your records to match your bank records for reconciliation purposes. Both the NSF Check and the NSF Fee are now deducted from your bank account in QuickBooks.
If you want to charge your Customer for the Bank Fee, set up an “Other Charge” Item called NSF Check Fee. Set up an Income Type Account named Returned Check Fees. Create a Statement Charge for the NSF Fee to the Customer. The Customer’s balance now includes the amount of the NSF Check and the NSF Check Fee.
Prepare and send a Statement to the Customer. The Statement will show all of the transactions. The Customer will see the Original Invoice, the Original Payment, the Bounced Check, the NSF Check Fee and the new balance.
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