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

by Intuit•44• Updated 3 months ago

Learn how to enter your bounced checks in QuickBooks Online.

If a check you wrote bounces, you need to take care of the accounting in QuickBooks.

A check bounces when your bank account has non-sufficient funds (NSF) or doesn’t have enough money to cover the check 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 check bounced.

Scenario 1: Your check bounced, but your bank covered it and charged you a bank fee

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

Select + New.
Select Expense.
From the Payee ▼ dropdown menu:
- Select the vendor if the bank charged it to them.
- Select the bank if they charged it to your account.
From the Payment account ▼ dropdown menu, select the account you use to pay expenses.
To distinguish it from other expenses, enter “NSF fee” in the Ref no. field.
Under the Category column, select Bank Charges.
Enter the amount you were charged for.
Select Save.

Scenario 2: Your check bounced, your bank didn't cover it, and the vendor returned the check without redepositing it

You need to record the bank fee and void the check since your vendor didn’t accept it as payment. To void a check and record the bank fee:

Go to Expenses, then select Vendors (Take me there).
Select the vendor you paid.
Find and select the bounced check.
Select More, then select Void from the pop-up menu.
Confirm you want to void the check, then select OK.
Record the bank fee.
1. Select + New.
2. Select Expense.
3. From the Payee ▼ dropdown menu:
  - Select the vendor 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.

Scenario 3: Your check bounced, your bank didn't cover it, and the vendor keeps redepositing the check

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

If your bank records every bounce and reversal

Enter a journal entry to reverse the bounced check 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 check amount in the Debits column.
6. On the second line, select Accounts Payable from the ▼ dropdown menu in the Account column. The check amount populates.
7. From the Name column, select the vendor.
8. In the Memo field, enter a note why you created the journal entry.
9. Select Save.
Reopen the bill and link the bounced check to the journal entry.
1. Go to Expenses, then select Vendors (Take me there).
2. Find and select the vendor’s name.
3. In the Transaction List, find and select the bounced check.
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.
Record the bank fee.
1. Select + New.
2. Select Expense.
3. From the Payee ▼ dropdown menu:
  - Select the vendor 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.
Repeat steps 1 to 3 for every bounce.

Record the bill payment when your bank account has enough funds to cover the check payment.

If your bank only records successful payments

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