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Intuit

Record a bounced cheque using an invoice

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

To record a bounced cheque using an invoice, you have to create two product or service items, and set one up to use a bank account and the other to use an income or expense account to track bank service charges. You then create an invoice for the bounced cheque and fees and record the bank service charge.

Creating a new product or service called Bounced Cheque and linking it to the original bank account instead of an income account reverses the cheque in your bank register. When you create a new invoice for the fees the customer owes you and receive a new payment, a new deposit amount is created.

We'll walk you through the process with these easy-to-follow steps.

Step 1: Create two Service items

The first step is to create Service items for the bounced cheque and fees.

  1. Select the Gear icon at the top.
  2. Under Lists, select Products and Services.
  3. Select New.
  4. In the Product/Service information panel, select the Service item.
  5. In the Name field, enter "Bounced Cheque".
  6. From the Income account drop-down, select the bank account the cheque was returned on.
  7. Select Save and new to create the second item.
  8. In the Name field, enter "Bounced Cheque Fee".
  9. From the Income account drop-down, select or add an income account called Bounced Cheque Fees. Alternatively, select an existing expense account that you use to track your bank charges.
  10. Select Save and Close.

Step 2: Create the invoice

Once the service items are created, you must create an invoice for the amount of the bounced cheque and fees:

  1. Select + New.
  2. Under Customers, select Invoice.
  3. Select the Customer name and enter the date the cheque bounced in the Invoice date field.
  4. In the Product/Service column, select the bounced cheque item you created.
  5. Enter the amount of the bounced cheque in the Amount field.
  6. On the second line of the Product/Service column, select the Bounced Cheque Fee item.
  7. Enter the Amount to charge the customer for the bounced cheque.
  8. Select Save and close.

Step 3: Record the bank service charge

The next step is to record the bank service charge as an expense:

  1. Select + New.
  2. Under Suppliers, select Expense.
  3. From the Payment account drop-down, select your bank.
  4. In the Payment date field, enter the date the cheque bounced.
  5. Enter “NSF fee” in the Ref no. field.
  6. Under Category details, in the Category field, select the expense account that tracks charges from your bank.
  7. Enter the amount your bank charged you for the bounced cheque in the Amount column.
  8. Select Save and Close.

Step 4: Record the payment from your customer

When you receive payment from your customer, you must record it and link it to the invoice you created.

  1. Select + New.
  2. Under Customers, choose Receive Payment.
  3. Select the customer from the Customer drop-down list.
  4. Enter the Payment date and Payment method for the new payment.
  5. From the Deposit to drop-down, select the bank account for the payment.
  6. Enter the Amount received.
  7. Select the invoice you created from the Outstanding Transactions list.
  8. Select Save and Close.
Note: This method will overstate your Customer Detail report by the amount of the bounced cheque. Unlike the Profit and Loss report, the Sales by Customer Detail report shows all sales, regardless of whether the sale involves an income account.

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