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Handle a rejected or failed bank transfer payment

Learn what to do in QuickBooks Online when a customer's bank transfer is rejected or returned.

Bank transfer payments can fail because of incorrect bank info or insufficient funds. We'll show you how to handle this situation to keep your books in order.

Note: This article is about failed electronic and ACH bank transfers. See record a bounced cheque for issues with paper cheques.

Step 1: Figure out where the failed payment is in QuickBooks

Where the payment is in your books determines your next steps.

  1. Select + New.
  2. Select Bank deposit or Record bank deposit.
  3. Review the QuickBooks Payments section.
  4. Look for the payment on the list. If you see it, it isn't deposited yet. If you don't, it is deposited.

Step 2: Create a service item to track the rejected bank transfer

  1. Go to Settings ⚙ and select Products and Services.
  2. Select New and then Service.
  3. Enter "Rejected bank transfer" for the name.
  4. Enter "Bank transfer payment received rejected by the bank" for the description.
  5. If the bank deposit is already deposited, select the bank account you deposited into for the Income account. Or if you haven't made the bank deposit yet, select Undeposited funds for the Income account.
  6. Select Save and close.

Step 3: Create a new invoice

Create an invoice to record the rejected payment. This may seem strange, but it's the best way to handle this situation. Recording it this way keeps your income and A/R accounts accurate.

  1. Select + New.
  2. Select Invoice or Send Invoice.
  3. Enter the customer who had the failed bank transfer payment.
  4. Add the Rejected bank transfer item you created in step 2 to the invoice.
  5. Enter the total amount of the rejected payment.
  6. Make sure Tax is not selected.
  7. Select Save and close.

Step 4: Move the original payment to the invoice you just created

Since the payment didn’t go through, you need to remove it from the original invoice. To keep your books straight, move the failed payment to the new invoice.

  1. Open the invoice that has the rejected bank transfer payment.
  2. Select the Payment link to open the rejected payment.
  3. Uncheck the original invoice, then select the new one you created in step 3.
  4. Select Save and close.

Step 5: (Optional) Charge your customer for the failed payment fee

If you were charged a fee for a returned payment, you may want to pass it on to your customer.

First, create a "rejected bank transfer fee" item

  1. Go to Settings ⚙ and select Products and Services.
  2. Select New and then Service.
  3. In the Name field, enter "Returned Bank Transfer Fee."
  4. From the Income account drop-down, select or add an income account called Returned Bank Transfer Fees. Or, select an expense account you already use to track your bank charges.
  5. Select Save and close.

Then, add the item to the original invoice and resend it

  1. Open the invoice.
  2. Add the returned bank transfer fee item.
  3. Enter the amount of the fee you were charged.
  4. Resend the invoice.

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