How to Enter Bounced Checks in QuickBooks

If your business processes enough transactions, eventually you are going to have a check that bounces, also called an NSF (Non Sufficient Funds) check. Without properly processing a bounced check, the cost to your business could be substantial. Does your business have a system configured in QuickBooks to track bounced checks? If not, you should definitely establish one. Here’s how.

Choose “Lists” then “Item List.” Click the Item drop-down arrow and select “New.” Click the Type drop-down arrow and select “Other Charge,” naming it NSF Check. Leave 0.00 in the “Amount” field and click the Tax Code drop-down arrow and select “Non.”

Next you’ll want to create an invoice to recover the amount owed to your business, plus any bank fees you want to recover. This amount can be larger than the amount your bank charged you, depending on your state’s laws. Once (if) you receive payment from the customer, use “Receive Payments” to record the transaction.

To record the bank’s charge for the NSF check, open the register and enter the amount in the Payment column and post the transaction to your bank charges expense account.

Should you try to redeposit the check? Probably not, especially if you risk incurring another charge that may be difficult to collect from your customer. Most banks only allow you to redeposit a bounced check once. As a business owner, you should request a new check or a certified check from your customer. If you’re having difficulty collecting amounts owed to you from customers, please refer to my earlier post, Systemize Your Outstanding Account Collection Process.

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