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

SOLVED•by QuickBooks•2•Updated January 26, 2024

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.

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

  1. Select + New.
  2. Select Expense.
  3. From the Payee ▼ dropdown menu:
    • 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 menu, 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.

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 Expenses and select Suppliers (Take me there).
  2. Select the supplier you paid.
  3. Find and select the bounced cheque.
  4. Select More, then select Void from the pop-up menu.
  5. Confirm you want to void the cheque, then select OK.
  6. Record the bank fee.
    1. Select + New.
    2. Select Expense.
    3. From the Payee ▼ dropdown menu:
      • 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 menu, 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.

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

  1. Enter a journal entry to reverse the bounced cheque payment.
    1. Select + New.
    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 menu in the Account column.
    5. Enter the cheque amount in the Debits column.
    6. On the second line, select Accounts Payable from the ▼ dropdown menu in the Account column. The cheque amount populates.
    7. From the Name column, select the supplier.
    8. In the Memo field, enter a note why you created the journal entry.
    9. Select Save.
  2. Reopen the bill and link the bounced cheque to the journal entry.
    1. Go to Expenses and select Suppliers (Take me there).
    2. Find and select the supplier’s name.
    3. In the Transaction List, find and select the bounced cheque.
    4. Uncheck the checkbox for the bill, then select the one for the journal entry.
    5. Confirm you want to make the changes, then select Save.
  3. Record the bank fee.
    1. Select + New.
    2. Select Expense.
    3. From the Payee ▼ dropdown menu:
      • 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 menu, 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.
  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.

  1. Change the payment date to the date the payment was processed.
    1. Go to Expenses, then select Suppliers (Take me there).
    2. Find and select the supplier’s name.
    3. In the Transaction List, find and select the bounced cheque.
    4. Change the payment date.
    5. Confirm you want to make the changes, then select Save.
  2. Record the bank fee.
    1. Select + New.
    2. Select Expense.
    3. From the Payee ▼ dropdown menu:
      • 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 menu, 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.

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