Customer put a stop payment on an already deposited check

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@Anonymous wrote:

We had a customer put a stop payment on an already deposited check, which of course, was last month and the deposit has already been reconciled. We have the new check and I need to know what to do now so our reconciliation isn't messed up! Thank you!  

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Hi,

So does it mean that the invoice should remain paid and you only issue the refund to the customer?

Hello there, PBG.

Let me bring clarifications to concern on handling stop payment from a deposited check in QuickBooks Online (QBO).

Yes, you got it right! Invoices will remain paid after recording a Refund Receipt to offset the amount from the recorded check.

You may want to create a new Invoice if you wish to Receive Payments from your customers.

Always feel free to drop me a reply below if you have additional questions and I'd be glad to assist you further.

Just had the same scenario

• Customer paid an invoice in full with a check 11/01/22
• We recorded the check as a payment against the invoice on 11/14/22
• We deposited and recorded the check as a deposit in our bank account as we always do on 11/14/22
• Customer put a STOP payment on the check on 11/15/22 since they did not see it clear their bank
• The two week delay was due to USPS and AR personnel being on vacation - perfect storm
• Our bank sent us a "Return Item" notice indicating the STOP payment from the customer and removed the original full check amount from our bank account
• Our bank charged us $10.00 return item fee
• Contacted the customer who sent a second check to pay the invoice. They want us to void the first check and send them a copy indicated it was voided and to cash the second check.

So how do you handle recording the STOP Payment of the original check, void the invoice payment, clear the invoice payment so it shows the invoice as not paid, record the return item original check amount on our bank account, and apply the $10 bank charge for the return item?

We don't care about getting the $10.00 fee repaid by our customer.  Once this is all done we can simply accept the second check, deposit it, and receive payment against the invoice, but we have to do the first part of cleaning up the first check that was deposited.

None of the answers so far solves the first part of the equation. 

I did think that it's basically a zero sum game accept for the $10 fee.  I could record the bank fee and just remember when I reconcile November their was a deposit/return of the check amount that cancel each other out and simply delete the customer check for the invoice payment.   One issue with this method is the check was deposited with other checks, so during reconciliation I would just have to remember this deposit is actually less the customer check and not record the return item seen on the bank statement and only record the fee.  Of course this method, although simple and will work, doesn't record any aspect of the STOP payment.

Any guidance is greatly appreciated.

Thanks for joining this thread, TPQUINN-61. I appreciate your detailed information.

Initially, I'd recommend working with an accounting professional to properly identify how you should go about entering each of these transactions into your books. If you're in need of one, there's an awesome tool on our website called Find a ProAdvisor. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.

If a customer's payment bounces, you can enter the stop payment as an invoice. You'll want to be aware that when you use this method, your Customer Detail reports will overstate the amount of your bounced payment. This is because the Sales by Customer Detail reports show all sales, regardless of whether they involve income accounts or not.

The first step is to create two service items to reverse your payment.

Here's how to create the first item:

1. Use the Gear () icon, then go to Products and services.
2. Click your New button and choose Service.
3. In the Name field, enter "Bounced check".
4. From your Income account ▼ drop-down list, pick an appropriate bank account.
5. Select Save and close.

Now you can create a second item to track bank service charges:

1. From the Products and services screen, click New, then Service.
2. In your Name field, enter "Bounced check fees".
3. Use the Income account ▼ drop-down list to choose an appropriate account. This can be an expense account you use to track bank charges. You can also create a new account if necessary.
4. Select Save and close.

Next, you'll need to create an invoice for your bounced check and fee, record the bank service charge, and enter your payment from the customer.

Please don't hesitate to send a reply if there's any additional questions. Have a lovely day!

How do I correct this in Enterprise?

How do I correct this with Enterprise? 

Customer paid with check

check was deposited

customer stopped payment (for wrong account)

Bank notified me after I reconcilled that month's statement

Customer sent new check

I don't see where I can refund customer (to correct bank balance) without issuing a credit.

Hello there, @Sue133.

I'll guide you on how you can handle failed or stopped payments (check) in QuickBooks Desktop (QBDT) to keep your income account accurate.

You can record stopped payments or bounced checks from customers with the Record Bounced Check feature, or by manual process. Please note that the former-mentioned feature can only be used in single-user mode and only applies to check payments done through the Customer Payment window.

If you opt to use the Record Bounced Check feature, here's how:

1. Go to Customers, then select Customer Center.
2. Select the Transactions tab, then choose Received Payments.
3. Double-click the payment you want to record as a stopped payment.
4. On the receive payments window, select the Record Bounced Check icon on the Main ribbon tab.
5. In the Manage Bounced Check window, enter all the needed info, like bank fee and date, then select Next.
6. QuickBooks will show you the Bounced Check Summary, so you know what will happen behind the scenes.
7. Select Finish.

If you choose to manually record the stopped payment, perform the following:

1. Create an item and income account for tracking the stopped payment check and its charges.
2. Create a journal entry to reverse the original payment.
3. Switch the payment for the invoice to the reversing journal entry.
4. (Optional) Resend open invoice.

You can read this article for the complete guide on how you can record stopped payments or bounced checks from customers in QBDT: Handle Non-Sufficient Funds (NSF) or bounced checks from customers.

Once everything is all set, you may also want to check out this article if you wish to learn more about the ways you can track customer transactions in QBDT: Get started with customer transaction workflows in QuickBooks Desktop.

Please feel free to leave a comment below if you have other concerns about managing sales and income transactions in QBDT. I'm always ready to help. Take care, @Sue133.

Just a note to the instructions above- choose the customer first, otherwise Quickbooks will remove account & payment info from earlier steps.

when I issue the refund, it puts that in the credit column also.  So now it shows the customer has INCREASED his paid balance vs decreasing it

I'm so confused

I appreciate you joining the thread and detailing your concerns about issuing refunds. Let me share the guidelines on how you can record a refund in QuickBooks Online.

If you entered a refund for a customer who has overpaid, there's no need for a credit memo, as it will already have an unapplied credit that acts as your credit memo. Here's how:

1. Go to + New and choose Expense.
2. In the Payee field, select or enter the desired customer.
3. In the Payment Account field, select the bank the money is being refunded.
4. In the Category field, select the Debtors account (Accounts receivable).
5. In the Amount field, enter the amount of the refund.
6. In the Tax field, select the appropriate Tax (not inclusive/exclusive of tax), then Save.
7. Next, go to + New and select Receive payment.
8. Add the Customer and select the Payment method and Deposit to.
9. The balance should be 0 as they will cancel each other out.
10. Select Save and Close.
11. If you have Online Banking, go to Transactions, then Bank Transactions. Then match the record you found.

If recording the refund to lower the bank balance incurs an expense, then ensure to record the refund and associate it with the customer's credit or overpayment. Here's how:

1. Go to + New.
2. Select Expense, Add Expense, or Check. If you're in the Business view, follow the steps to switch to the Accountant view first. Then come back to these steps.
3. Choose the customer you want to refund from the Payee ▼ dropdown.
4. From the Payment Account ▼ dropdown, select the bank account to which you deposited the overpayment.
5. On the first line of the Category column, select Accounts Receivable.
6. Enter how much you want to refund in the Amount field.
7. Fill out the other fields as you see fit, then click Save and close.

For detailed information, refer to this article: Record a customer refund in QuickBooks Online.

However, if you are referring to something else, I'd appreciate it if you could provide me with more details. You can also attach a screenshot so we can look further into this and have an appropriate solution.

I'm adding this article to help you learn more about managing your receipts and transactions in QBO: Email receipts and bills to QuickBooks Online.

Please post any additional QuickBooks-related questions or concerns in the Community. We're always available and eager to assist you with your inquiries. Have a fantastic day ahead of you!