What to do if your cheque bounces and your bank account has non-sufficient funds

Learn how to enter your bounced cheques in QuickBooks Online.

If a cheque you wrote bounces, you need to take care of the accounting in QuickBooks.

A cheque bounces when your bank account has non-sufficient funds (NSF) or doesn’t have enough money to cover the cheque amount. When this happens, your bank charges you an NSF or bank fee. How you plan to handle the fees influences how to handle the accounting. Follow the steps based on how your cheque bounced.

In this article, you'll learn how to handle the following scenarios:

• Your cheque bounced, but your bank covered it and charged you a fee
• Your cheque bounced, your bank didn't cover it, and the supplier returned the cheque without redepositing it
• Your cheque bounced, your bank didn't cover it, and the supplier keeps redepositing the cheque

Scenario 1: Your cheque bounced, but your bank covered it and charged you a bank fee

You only need to record the bank fee since your cheque was processed. To do this:

1. Select + New or + Create.
2. Select Expense.
3. From the Payee ▼ dropdown:
   • Select the supplier if the bank charged it to them.
   • Select the bank if they charged it to your account.
4. From the Payment account ▼ dropdown, select the account you use to pay expenses.
5. To distinguish it from other expenses, enter “NSF fee” in the Ref no. field.
6. Under the Category column, select Bank Charges.
7. Enter the amount you were charged for.
8. Enter the applicable fields, if any.
9. Select Save or Save and close.

Scenario 2: Your cheque bounced, your bank didn't cover it, and the supplier returned the cheque without redepositing it

You need to record the bank fee and void the cheque since your supplier didn’t accept it as payment. To void a cheque and record the bank fee:

1. Go to All apps , select Expenses & Bills, then select Suppliers (Take me there).
2. Select the supplier you paid to open the details.
3. Under the Transaction List, find and select the bounced cheque to open the details.
4. Select More, then select Void from the pop-up menu.
5. Select Void Transaction to confirm.
6. Record the bank fee.
   1. Select + New or + Create.
   2. Select Expense.
   3. From the Payee ▼ dropdown:
      • Select the supplier if the bank charged it to them.
      • Select the bank if they charged it to your account.
   4. From the Payment account ▼ dropdown, select the account you use to pay expenses.
   5. To distinguish it from other expenses, enter “NSF fee” in the Ref no. field.
   6. Under the Category column, select Bank Charges.
   7. Enter the amount you were charged for.
   8. Enter the applicable fields, if any.
   9. Select Save or Save and close.

Scenario 3: Your cheque bounced, your bank didn't cover it, and the supplier keeps redepositing the cheque

This causes the cheque to bounce multiple times, with multiple reversals and bank fees.

If your bank records every bounce and reversal

1. Enter a journal entry to reverse the bounced cheque payment.
   1. Select + New or + Create.
   2. Select Journal entry.
   3. Enter the date the check bounced in the Journal date field.
   4. On the first line, select the bank account from the ▼ dropdown in the Account column.
   5. Enter the cheque amount in the Debits column.
   6. From the Name column, select the customer.
   7. On the second line, select Accounts Payable from the ▼ dropdown in the Account column. The cheque amount populates in the Credits column.
   8. From the Name column, select the supplier.
   9. In the Memo field, enter a note why you created the journal entry.
   10. Enter the applicable fields, if any.
   11. Select Save or Save and close.
2. Reopen the bill and link the bounced cheque to the journal entry.
   1. Go to All apps , select Expenses & Bills, then select Suppliers (Take me there).
   2. Find and select the supplier’s name to open the details.
   3. In the Transaction List, find and select the Bill Payment transaction of the bounced cheque to open the details.
   4. Uncheck the checkbox for the bill, then select the checkbox for the journal entry.
   5. Confirm you want to make the changes, then select Save or Save and close.
3. Record the bank fee.
   1. Select + New or + Create.
   2. Select Expense.
   3. From the Payee ▼ dropdown:
      • Select the supplier if the bank charged it to them.
      • Select the bank if they charged it to your account.
   4. From the Payment account ▼ dropdown, select the account you use to pay expenses.
   5. To distinguish it from other expenses, enter “NSF fee” in the Ref no. field.
   6. Under the Category column, select Bank Charges.
   7. Enter the amount you were charged for.
   8. Select Save or Save and close.
4. Repeat steps 1 to 3 for every bounce.

Record the bill payment when your bank account has enough funds to cover the cheque payment.

If your bank only records successful payments

1. Change the payment date to the date the payment was processed.
   1. Go to All apps , select Expenses & Bills, then select Suppliers (Take me there).
   2. Find and select the supplier’s name to open the details.
   3. In the Transaction List, find and select the bounced cheque to open the details.
   4. Change the payment date.
   5. Confirm you want to make the changes, then select Save or Save and close.
2. Record the bank fee.
   1. Select + New or + Create.
   2. Select Expense.
   3. From the Payee ▼ dropdown:
      • Select the supplier if the bank charged it to them.
      • Select the bank if they charged it to your account.
   4. From the Payment account ▼ dropdown, select the account you use to pay expenses.
   5. To distinguish it from other expenses, enter “NSF fee” in the Ref no. field.
   6. Under the Category column, select Bank Charges.
   7. Enter the amount you were charged for.
   8. Select Save or Save and close.