How do I account for a returned payment in QuickBooks Online?

the link posted is instructions for Quickbooks Desktop... is there an option like this in Quickbooks Online?

Hello pipolhausen,

It’s nice to have you in the Community. I’m here to help record the returned payment in QuickBooks Online.

The link to the article given by @lyndaartesan refers to handling bounced checks from customers in QuickBooks Desktop. To record the same transaction in your QBO account, you can either write a check, or use a Journal entry.

Here are articles to keep you going:

• Enter a returned or bounced check using write check
• Enter a bounced check using a Journal Entry

Meanwhile, if you’re referring to recording a check returned by your vendor due to non-sufficient funds, you’ll have to create a journal entry and a bill payment check. Let’s go through these steps one-at-a-time:

Step 1: Enter a reversing journal entry.

1. Go to the Plus icon (Create button), then Journal Entry.
2. Make sure the Date, Entry No, and Vendor name are correct.
3. Debit the checking account for the amount of the NSF check.
4. Credit the A/P account for the amount of the NSF check.
5. Click Save & Close.

Step 2: Un-link the bill from the payment check and link it to the journal entry.

1. In the left panel, click Expenses, then Vendors.
2. Locate the vendor you need, and open the original bill payment.
3. From the Bill Payment screen, put a check mark in Journal Entry you’ve created.
4. Uncheck the Bill originally paid by the bill payment check.
5. Enter a Memo to indicate the check was returned for NSF. Then, select Save & Close.

Step 3: Create a new bill payment check to record the new payment transaction.

1. Go to the Plus icon (Create button), select Pay Bills.
2. Choose the bill originally paid by the NSF bill payment check.
3. Complete all other required information.
4. Click Save and Close.

That should do it! You should now be able to record the returned payment regardless if it is for your customer or from your vendor.

If you have other questions, feel free to leave me a message below. I’ll be on standby for your response.

This doesn't work for the online version. How can you do it for the online version? 

And for a church, which doesn't have an invoice or bill - it is just a receipt of funds - the whole invoice thing isn't going to work. 

I can share some additional information on how to handle returned payment in QuickBooks Online, ADescartes.

If creating a Journal entry isn't your option. Then, you can write a check instead.

Here's what you'll need to do:

1. Enter the returned check with Write Check.
2. Change the payment entry.
3. Create Service items for bounced checks and fees.
4. Create an invoice for the bounced check fee.
5. Enter the bank service charge.
6. Print and send the statement to your customer.
7. Record the new payment from your customer.

For more detailed steps about this process, you can check this article: How to enter a returned or bounced check using Write Check.

Additionally, I'm attaching a great resource that you may find helpful in the future:

Handle a rejected or failed bank transfer payment.

If you have any additional questions on how to record returned payment, please get back to me by clicking the Reply button.

How do you handle recording the insufficient fund's transactions when the customer has paid through QuickBooks ACH online the transaction has been returned for insufficient funds but the invoice shows paid in full.

How do you handle recording the insufficient fund's transactions when the customer has paid through QuickBooks ACH online.The transaction has been returned for insufficient funds but the invoice shows paid in full.

Thanks for joining this conversation, rlaa.

To record a returned payment, you'll have to create a new service item and use it to create an invoice. Then, attach the rejected payment. Lastly, mark the old transaction as unpaid and re-send it to your customer.

I'll show you how:

First, you'll need to determine if the payment deposit was recorded or not.

1. Select the Plus icon at the top and choose Bank Deposit.
2. Go to the area labeled QuickBooks Payments.
3. Look for the payment in the list. If it is there then it's undeposited. If not, the deposit was recorded to your bank account in QuickBooks.

Next, create a special service item. This will let you account for the rejected payment.

1. Select the Gear icon at the top and choose Products and Services from the pop-up window.
2. Click the New button, then choose Service.
3. Enter the following details:

   If the payment was deposited in QuickBooks

   • Name - Rejected bank transfer
   • Description - Bank transfer payment received but was rejected by the bank
   • Income account - Select the bank account where the payments were deposited to

   If the payment wasn't deposited in QuickBooks

   • Name - Rejected bank transfer
   • Description - Bank transfer payment received but was rejected by the bank
   • Income account - Undeposited funds
4. Leave everything else blank.
5. Hit Save and close.

Then, create a new invoice which you can send to your customer.

1. Go to the Plus sign icon and hit Invoice from the pop-up window.
2. Select the customer name in the first field.
3. Enter the Rejected bank transfer item you just created in the steps above. (Do not use the original product/service you used on the invoice).
4. Add the total amount of the invoice including tax if applicable. (Do not mark as taxable).
5. Select Save and close.

Step 4: Attach the rejected payment to the new invoice.

1. Open the original invoice for the customer.
2. Select the Payment link to open the rejected payment.
3. Uncheck the original invoice and select the new one.
4. Hit Save and close.

The account balance is now set and you can resend the original invoice to collect the payment.

Please visit this article for the complete steps in handling a returned payment: Handle a rejected or failed bank transfer payment.

Reach out to me if there is anything else I can help you with. I'll always be here to assist you. I look forward to hearing about your success.

I know this is an old post but I’m hoping someone will reply. I’m having the same issue and I’ve done all the steps mentioned. Now what do I do with the new invoice that the returned bank transfer has been attached to? It now shows it needs attention❗️instead of the original invoice.  What happens to that invoice now? When the customer pays again, they will be paying the original invoice not that one, correct? Do I send both invoices? I’m confused. Seems I traded one problem for another. 

Thanks for joining on this thread, @R_PS.

I appreciate you for following the resolution shared by my peers and letting us know the result. I want to make sure the returned bank transfer is properly tracked in QuickBooks.

Before performing any troubleshooting, may I know if you’re using the same email address to send the new invoice or not? This way, I can provide a timely solution to your concern.

While waiting for your reply, allow me to share some insights about receiving customer payments. If the client clicked the Pay Now button on the original invoice or the new one, the money will be posted to the transaction selected. For example, if it’s from the old invoice, you’ll see a message stating the entry will be marked as paid.

Let’s remove the payment from the original invoice since it didn’t go through successfully. Then, move the failed transaction to the new entry to keep your books in order.

Here's how:

1. Open the invoice that has the rejected bank transfer payment.
2. Click the Payment link to open the rejected payment.
3. On the Receive Payment page, unmark the box for the original invoice and check the box for the returned bank transfer’s invoice.
   
4. Hit Save and close.

However, if the payment was sent to the new invoice (returned bank transfer), void the original transaction to avoid duplication. Check out the Void or delete transactions in QuickBooks Online guide for detailed instructions.

If you followed the instructions in Step 5 of the Handle a rejected or failed bank transfer payment article, add the item for the returned bank transfer to the original invoice. Next, resend it so your customer will pay the correct entry. In regard to the needs attention prompt, click on it to view more details. From there, we’ll be able to identify the cause and apply the permanent solution.

For additional resources, let me share the Fix rejected ACH payments or fees in QuickBooks Payments article. It contains a list of the rejection codes as well as instructions on how to handle each one.

Please keep in touch if there's anything else I can do for you. Thanks for reaching out, wishing you and your business all the best!

Yes I’m using the same email address for both but now the new invoice shows a ❗️and says it needs attention just like the original invoice did before I followed the instructions provided. It shows a $0.00 balance due but it still shows “Returned” under status. I have yet to send either invoice to the customer. Would that make a difference? If so, do I send just the original invoice  with the returned bank transfer fee added to it or do I send the new one that was created, as well, that shows the returned bank transfer? 

Hi there, R_PS,

You'll want to send the original invoice to your customer and have the option to charge a fee for the returned payment.

Meanwhile, the new invoice helps record the rejected payment. This is to keep your income and A/R accounts accurate. You'll want to refer again to this article: Handle a rejected or failed bank transfer payment for instructions and detailed steps.

For the need attention symbol, I suggest clicking it to know the issue. You can also chat with our QuickBooks Merchant Service Team so they can check what needs to be done. Doing this will help ensure your customer will pay what they owe.

Let me know how everything turns out by commenting below. I'm always around whenever you have follow-up questions.

I read that article and followed it step by step which is why I now have a new invoice that is showing the same “❗️Needs Attention” notice that the original invoice was showing before I transferred it to this new invoice. When I click on it, it shows ❗️Returned under status, the same as the original invoice did.  It says customer bank denied this payment. 

Good Evening, @R_PS. 

I hate to hear that this happened to you again when transferring the information to the new invoice and receiving the payment. I recommend contacting our Merchant Services Customer Support Team on this matter. The Community is a public communication platform that many people use. For this problem, we'll need to gather some personal information to check further into it. Here's how: 

1. Go to the Help icon. 
2. Press Contact Us. 
3. Give a brief description of the issue (Needs attention message on customer payment/invoice) and click Let's Talk. 
4. Scroll down and choose to Get a Callback. 

I want to make sure that you're able to get this resolved as soon as possible. Let me know how it goes. Bye for now!