How to Enter a Bounced Check in QuickBooks Online

End of the month, after continuous transactions and paying for all dues, you must not figured about how much balance you left in an account. May be when you paid a check to a client it came as a bad check or bounce check. It returns as Non-Sufficient Funds (NSF), which indicates that the check cannot be processed due to insufficient funds in the bank account. However, it is not a pleasurable situation, but you need to deal with it. At first you need to decide how you can make a good solution about the bounced check. Then you will need to record some transactions in QuickBooks. There can be two options generally. You may be having a temporary trouble with cash flow, in that case you can ask the client to redeposit the check. However, if it is a long-term problem of cash flow, then you can make a credit card payment.

Steps to be followed

When you got a bounced check due to insufficient funds, you will need to perform a few steps to handle the situation and make a report in QuickBooks.

First, check and see if items to track bounced checks and the charges associated with it are already set up in the QuickBooks file. Go to Lists, choose the Item List and check Other Charge Items like Bounced Check and Bounced Check Fee. If the items are present in the Item List, then there is no need to create those again and can skip one step. Otherwise, you will need to set up the items.

  • Create items to track bounced checks and associated charges:
  • Go to ‘Lists’ tab and click ‘Item List’
  • Click on the ‘Items’ tab in the list and create ‘New’
  • Choose the ‘Type’ and select ‘Other Charge’ and rename it ‘Bounced Check’
  • Leave a zero in the box of ‘Amount’ or % field
  • If you are using Tax Codes, choose Non from the list of ‘Tax Code’
  • Under ‘Account’ section, select your bank account
  • Click ‘Next’
  • Now create another ‘Other Charge’ item and named it ‘Bounced Check Fee’ where you can put the associate charges
  • Put zero at the ‘Amount’ or % field
  • Again select Non from the Tax Code list
  • Select Bank Service Charges in ‘Account’ section
  • And, click ‘OK’
  • Make a re-invoice for the customer against the bounced check
  • Select ‘Customer Center’
  • Select the customer with the bounced check under the ‘Customers & Jobs’ tab
  • Right-click and select ‘Create Invoices’
  • Enter the Bounced Check item as the first line item in the invoice, to determine the amount. As the item is attached to the bank account, it will deduct the amount of the bounced check from your bank account
  • In the second line item, put the Bounced Check Fee
  • Fill the invoice completely
  • Send the QuickBooks Bounced Check Letter along with the new invoice
  • Go to ‘QuickBooks Customer Center’ and select the customer
  • Click on the ‘Word’ menu at the top and select ‘Prepare Letter to Customer’
  • Follow the instructions that are popping up on screen
  • In the ‘Choose a Letter Template’ tab, elect ‘Bounced Check’
  • While reconciling the bank statement, enter the bounced check charge
  • Include the charge bank has deducted for the bad check, in the ‘Service Charge’
  • On ‘Service Charge Account’ sections, put ‘Bank Service Charges’

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