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Record a bounced check using an invoice in QuickBooks Online

SOLVEDby QuickBooks279Updated 3 weeks ago

Learn how to record a bounced or Non-Sufficient Funds (NSF) check using an invoice in QuickBooks Online.

Did the check from your customer bounce? Don’t worry. There are different ways you can record a bounced check in QuickBooks. However, one of the easiest ways is to use an invoice. Follow these steps to record the bounced check and maintain the accuracy of your books.

You can also learn what to do if your own check bounces.

Important: When you use this method, your Customer Detail report will overstate the amount of the bounced check. Unlike the Profit and Loss report, the Sales by Customer Detail report shows all sales, regardless of whether the sale involves an income account.

Step 1: Create two service items

Create an item to reverse the payment

You need to create a new service item and link it to your bank account instead of an income account. When you use it on an invoice, it reverses the check in your bank register.

  1. Go to Settings ⚙, then select Products and services.
  2. Select New, then select Service.
  3. In the Name field, enter "Bounced check".
  4. From the Income account dropdown, select the bank account you used to receive the bounced check.
  5. Select Save and close.

Create an item to track bank service charges

  1. Go to Settings ⚙, then select Products and services.
  2. Select New, then select Service.
  3. In the Name field, enter "Bounced check fees".
  4. From the Income account dropdown, select or add the income account "Bounced check fees". Or, select an expense account you use to track bank charges.
  5. Select Save and close.

Step 2: Create an invoice for the bounced check and fee

  1. Go to + New, then select Invoice.
  2. From the Add customer ▼ dropdown, select the name of the customer who wrote the bounced check.
  3. Select the Invoice date field, then enter the date the check bounced.
  4. From the Product or service ▼ dropdown, select the item Bounced check.
  5. Enter the amount of the bounced check in the Amount field.
  6. Select another Product or service ▼ dropdown, then select the item Bounced check fees.
  7. Enter the amount to charge the customer for the bounced check in the Amount field.
  8. Select Save and close.

Step 3: Record the bank service charge

  1. Go to + New, then select Expense.
  2. From the Payment account ▼ dropdown, select the bank account you used to record the bounced check.
  3. Select the Payment date field, then enter the date the check bounced.
  4. In the Ref no. field, enter "NSF fee".
  5. From the Category ▼ dropdown, select the income account "Bounced check fees" or the expense account you use to track bank charges.
    Important: Make sure to select the same account you used for the item you created "Bounced check fees".
  6. Enter the amount your bank charged you for the bounced check in the Amount field.
  7. Select Save and close.

Step 4: Record the payment from your customer

  1. Go to + New, then select Receive payment.
  2. From the Customer ▼ dropdown, select the customer who paid using the bounced check.
  3. Enter the Payment date and Payment method for the new payment.
  4. From the Deposit to ▼ dropdown, select the same bank account you used to receive the bounced check.
  5. Select the invoice you created from the Outstanding Transactions list, then enter the amount you received in the Payment field.
  6. Select Save and close.

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