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How do I handle bounced cheques?

QuickBooks 2014

In the past, handling bounced cheques was a very lengthy, manual process. Now, when a customer's cheque is returned for insufficient funds, record it in QuickBooks. QuickBooks will automatically mark the original invoice as unpaid and create a new invoice for the fee you'd like to charge your customer. Then send your customer a statement, or the original invoice along with the new invoice (for the bounced cheque fee).

  1. Choose Customers and then Receive Payments.
  2. Click the Previous arrow until you see the transaction, or use another method to find the payment.
  3. On the Main tab at the top of the form, click Record Bounced Cheque. The Manage Bounced Cheque window appears.
  4. In the Bank Fee field, enter the amount your financial institution charged you for this bounced cheque.
  5. In the Date field, enter the date your financial institution charged you the fee.
  6. If necessary, click the Expense Account drop-down arrow and select the expense account to assign the bank fee to.
  7. If you track classes, click the Class drop-down arrow and select the appropriate class.
  8. In the Customer Fee field, enter the amount you would like to charge the customer for bouncing the cheque. Usually, this is more than the fee that your financial institution charged you.
  9. Click Next.
  10. Review the information in the Bounced Cheque Summary window. Then click Finish to record the bounced cheque
  11. Close the Receive Payments window.
QuickBooks 2009 - 2013

When a customer's cheque is returned for insufficient funds, perform the following steps:

  1. Create items for tracking bounced cheques and their associated charges:

    1. Go to the Lists menu and click Item List.

    2. Click the Item button and then click New.

    3. From the Type drop-down arrow, select Other Charge.

    4. From the Item Name/Number field, enter "Bounced Cheque."

    5. In the Amount field, leave a zero amount.

    6. In the Tax Code list, choose E.

    7. In the Account field, choose your bank account (for example, Chequing).

    8. Click the OK button.

    9. Repeat steps b though h to create a second Other Charge item titled "Bad Cheque Charge" for the service charge you assess customers for bounced cheques. Use this item when you reinvoice the customer to recover the service charge. In the Account field, choose an income account, such as Returned Cheque Charges. If the account doesn't exist, set it up.

    10. Click the OK button.

  1. Use the items created in step 1 to reinvoice the customer for the bounced cheque, plus any bank fees you want to recover.

    1. Click the Customer Centre icon.

    2. On the Customers & Jobs tab, click once to select the customer with the bounced cheque.

    3. Right-click and choose Create Invoices.

    4. For the first line item on the invoice, use the Bounced Cheque item for the amount of the bad cheque.

      Note: Because this item is linked to your bank account, this will reduce your bank account by the amount of the bounced cheque, thereby backing out the original transaction on your books.

    5. For the second line item on the invoice, use the Bad Cheque Charge item for the amount of any bank fees that you want to recover.

    6. Finish filling out the invoice as usual.

QuickBooks 2008 Multicurrency and earlier
  1. Go to the Banking menu and select Make General Journal Entries and enter the date in which the NSF cheque occurred.
  2. In the Account column, enter the Accounts Receivable that was used on the original invoice to the customer; in the Debt column, enter the total amount of the invoice, including tax; in the Name column, enter the name of the customer.
  3. In the Account column, type the name of the bank that was used in the original payment from the customer, in the Credit column, enter the total amount of the invoice, Save and Close.

This entry decreases your bank account by the amount of the payment and increases the accounts receivable account for the customer.  Next, create an item for the NSF charge.  This step is optional and is only required if the customer is going to be invoiced as an additional charge for the NSF cheque.

  1. Go to the Lists menu, select Item List; choose the Item button and New.
  2. In the Type field, select Other Charge, in the Item Name/Number field, type a name for the item.  For example: NSF Charge.
  3. In the Description field, enter information about the item, in the Amount or % field, enter the charge for the item and in the Sale Tax Code field, select the dot.
  4. In the Account field, select an income account and OK.

Note: Optionally, you can invoice the customer for the NSF charge.  This is only required if the customer is going to be invoiced an additional charge for NSF.

  1. Go to Customers menu, select Create Invoices.
  2. Create an invoice for the customer and use the Other Charge item created above.
  3. Enter the amount of the NSF charge, if the amount was not entered when the other charge item was created, select Save and Close.



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