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The How to Record Bounced Check Online on QuickBooks
If you deposit a check that you received from a customer and they don’t have enough funds in their bank account, the check will be returned to your bank. This is called an NSF check.
It is really difficult to track bad checks on the books, so it is always a better solution to record them using QuickBooks software.
This article will walk you through the process of registering bad checks in QuickBooks Online.
Why is it important to record bad checks in QuickBooks?
Bounced checks can not only impact your bank account, but also your spending and A / R balance (accounts receivable).
When a check is returned to your bank due to insufficient funds, the following events occur:
- The funds in your bank account will be reduced by the amount of the bad check received.
- Since your customer did not have sufficient funds to make the payment, your A / R balance will increase.
- Your bank will charge you the NSF fee (insufficient funds).
Therefore, if you want to reconcile your bank account, you should keep track of the additional fees you have been charged, as well as the bad check itself. You can easily do this by registering bad checks through QuickBooks.
Record a bounced check in QuickBooks Online
The following sections will show you how to record an NSF check using QuickBooks Online. There are three main steps to this process:
- Record the decrease in your bank balance.
- Record NSF charges.
- Charge your customer for the NSF fee (optional).
We will go through each of them in detail.
Record the decrease in your bank balance
To record the decrease in your bank balance, you will need to access the Write Checks window. There you will be able to see the amount that has been deducted from your bank account. This is the amount you will need to record in QuickBooks.
Go to the QuickBooks home page, click on the plus sign, which is at the top. A drop-down menu containing several categories will appear.
Select Check in the Supplier category. Once you have done that, the write verification window will appear. This is where you will need to provide the appropriate information, including the following:
- Payment Date – enter the date your check was returned.
- Bank Account – select the appropriate bank account where the check was returned.
- Payee – select the customer whose check bounced.
- Account – select the appropriate A / R.
- Description – enter information about the bad check.
- Memo – enter additional information and notes about the bad check.
- Amount – enter the amount of the returned check. Do not enter NSF charges.
- Check no – enter insufficient funds charges.
- Save – save the information you entered and close the window.
To complete the first step, select the Expenses option in the Suppliers category.
Save NSF charges
You will now need to record the NSF fees charged by your bank. Insufficient fund charges will be recorded as an expense.
To do this, you will need to enter the appropriate information in the Expenses window. Here is what you need to complete.
- Beneficiary – select your bank.
- Bank Account – select the bank account the check bounced from.
- Account – select the account you use to track bank charges.
- Ref no – Type “Bank NSF Fee” in the appropriate field.
- Description – Type “Bank NSF Fee” in the appropriate field.
- Amount – enter the amount of NSF fees you were charged.
- Save – save the information you entered and exit the window.
That’s all you need to do to register a bad check. However, if you want to charge your customer the insufficient fees, you will need to create an invoice. This is an optional step, so you can decide whether you want to do it or not.
How to charge your customer for NSF fees
From the home page, click on the plus sign and select the Invoice option in the Customers category. This will open the Customers window where you can create an invoice.
To do this, you will need to fill out the form that you would normally do if you were billing your customer. The only difference is that you will be using the NSF Client Fee.
Here’s how to do it.
- Customer – select the customer whose check bounced.
- Invoice Date – enter the date you want to invoice your customer for the NSF charges.
- Product / Service – In order to be able to track NSF charges, you must configure the NSF customer charges service option. Select Add New.
Once you have selected the Add New option, you will need to fill in the required fields.
Select Service in the Type section. In the Item Description field box, enter Customer NSF Charges.
Finally, in the Income account section, select Other income. This completes the Product / Service stage. The remaining information you will need to enter includes:
- Description – describe what these fees are, so your customer knows what they’re being charged for.
- Amount – enter the amount of the NSF fee. You can also add the inconvenience fee.
- Message – enter a message for your customer that they can see on the invoice.
- Save – save the information you entered and close the window.
Keep Track of Your Bounced Checks with QuickBooks
It might sound a little complicated, but posting bad checks to QuickBooks is actually pretty easy. With these instructions, you will be able to do it in a matter of minutes.
Did you find this tutorial useful? Have you ever posted an NSF check through Quickbooks Online? Tell us in the comments below.
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