Fraudulently Deposited Check to Vendor

Hi there, @haskenazi1.

I'm here to help handle/record the fraudulently deposited check in QuickBooks Online (QBO).

If the money in and money out was posted on the bank statement, then, you can unlink the fraud payment of the bill and change it to a deposit. You can deposit it to the accounts payable.

To unlink the fraud payment of the bill:

1. Click on Expenses at the left pane.
2. Select Vendors.
3. Select a vendor under Vendors.
4. Open the Bill Payment (Check) by clicking View/Edit under Action.
5. To unlink the bill and the payment, remove the check-mark beside the Bill.

Once done, apply the next payment to the bill.

Also, you may check these articles for future reference:

• How to record a bounced check entered using Accounts Receivable
• Record a bounced check in QuickBooks Online

Just add a post/comment below if you have any other QuickBooks questions. I'll be always happy to help you!

Thank you for taking the time to reply. Unfortunately this isnt the right resolution for me bc as mentioned, the check has not yet been refunded by the bank. I know how to handle that situation, but the question is how to handle a situation where the bank hasnt returned the first check yet which is already listed as the bill payment. 

I believe I need to add a receivable and a payable transaction. Receiveable for the money the bank owes me once they complete their investigation, and the payable for the money I still owe the vendor.

Hello there, @haskenazi1.

Thanks for the prompt response. Allow me to step into this discussion and help handle the check that hasn’t been refunded by the bank.

You can create a vendor (bank) and edit the bill payment (first check) in order to link the second check to the original bill. Let me show you how:

1. Go to Expenses and select Vendors.
2. From the Vendors window, click New Vendor.
3. Under Vendor Information, enter the Bank’s name and details.
4. Hit Save.

Once done, edit the payment attach to the bill and change the Payee name. Here’s how:

1. Go to the Expenses menu and select Vendors. 
2. Double-click the vendor's name.
3. Under the Transaction List window, select the Bill Payment and click View/Edit.
4. Click the Payee drop-down and select the name of the bank.
5. Hit Save and close.

You should now be able to link the second check to the bill. Take a look at this article for more information: How to enter and pay bills.

Once the investigation is over and the bank refunds you the money, create a deposit using Accounts Payable as the posting account and the vendor you made to offset the amount.

I’m adding these helpful articles for reference: 

• Vendors overview.
• How to record a bank deposit.

That should keep you going today. Reach out to me if you have any follow-up questions, I’m always here to help. Have a good one!

Thank you

I don't believe this works either because it does not create a receivable from the bank for me to track. What if they never end up refunding the money? In the example you gave, I don't believe I would see that they owed money. And, in real life this is a receivable which isnt captured in your example

Hello there, haskenazi1.

I appreciate you for getting back and sharing your thoughts with us. 

You have the option not to record unless you'll get the refund from your bank. Also, I'd recommend consulting with an accountant to guide and provide an expert advice in dealing with this concern.

If there's anything else I can do to help you, just let me know and I'll do my best to help you out.

Not recording also doesn't help. I think the solution proposing to attach the original payment to the bank as the vendor is on the right path but am just missing the piece which records a receivable from the bank. Perhaps a vendor credit ?

Or a holding account called "Bounced checks" which is an "other asset" account where the original check would go into and then be offset by a deposit of the refund once that arrives?

Hey there, @haskenazi1.

You can also create a vendor credit to record a receivable from the bank. Let me provide some details and help you from there.

When you follow the steps provided by my colleague @KhimG, you can create a Vendor Credit to denote your receivable.

You also have the option to not record anything unless you receive the refund coming from your bank. Here's how you can record a Vendor Credit:

1. Click on the Plus (+) icon, choose Vendor Credit.
2. Enter your bank under the Vendor drop-down.
3. Enter the necessary information.
4. Click on Save and Close.

But I still recommend reaching out to your accountant so he/she can advise you on how to handle this concern best. And also to maintain a correct balance in your books.

Feel free to get back to me if you have any other concerns.

I have the same issue, but on our case we are using Quickbook Enterprise Solutions, can you please guide me?

Thank you

Thanks for joining this thread, @InnerCat.

Let me guide you on how to record this fraudulently deposited check.

I'd suggest using a clearing account. This is a temporary account where you can use to move your money from one account to another. This way, you can create a receivable and payable transaction. 

Here's how to set up a clearing account:

1. Go to the Lists menu and select Chart of Accounts.
2. Click the Account drop-down arrow and choose New.
3. Select the Bank radio button.
4. Click Continue.
5. In the Account Name field, type in " Clearing Account" or "Wash Account."
6. Select Save & Close.

Then, you'll need to create a journal entry to move the money using the clearing account .

I'd recommend consulting an accountant before doing the steps. They can guide and provide expert advice in dealing with this concern.

You can check out this article about protecting your business against fraud: Prevent credit card fraud.

Please let me know if you need further assistance. Have a good one.

Hello, I am very late in response to this.

I just encountered this situation with our company and these are the steps I took to resolve the issue.

Please note the check that was originally issued had been cleared from the bank, so there was no way we could void the check.

1. I went to the fraudulent check and unapplied it to the corresponding invoices.

2. I created a journal entry 

     I debit the account the money was going back to (to show deposit - since bank was refunding us the check)

     I credit Accounts Payable and selected the corresponding vendor which will create an invoice to apply the fraudulent check to.

3. Go back to the vendor account and apply the fraudulent check to the General Journal Entry to clear the over payment.

4. Go to pay bill and issue new check for the outstanding invoices.

Hope this helps!