QBO: How to Handle Returned/Bounced Checks

If Needed, Create the Product/Service Items

1. Click the Gear icon, then click Products and Services.
2. At the top, click New, and then choose Service to create a new service item.
3. In the Name field, enter “NSF Check”.
4. From the Income account drop down list, select the bank account the check was returned on.
5. If you collect Sales Tax, Un-Check the “Is taxable” check-box.
6. Click Save.
7. Again, at the top, click the New, and then choose Service.
8. In the Name field, enter “NSF Fee”.
9. In the Sales price/rate field, enter your Company’s Bounced Check Fee (ie. $25.00).
10. From the Income account drop down list, select an income account (ie. Uncategorized Income), or create a new income account called “Bounced Check Fees”.
11. If you collect Sales Tax, Un-Check the “Is taxable” check-box.
12. Click Save.

Create an Invoice for the Returned Check

1. Click the “+” icon and choose Invoice.
2. Select the customer whose check bounced.
3. Enter the date the check bounced
4. From the Product/Service column, select the “NSF Check” item.
5. In the Amount column, enter the amount of the check that bounced.
6. On the second line, select the “NSF Fee” item. The amount should be automatically entered.
7. Click Save.

Enter the Bank Service Charge

1. In the “Choose a Payee” field, Enter your Bank’s name.
2. Choose the account that the check bounced on, typically your checking account.
3. Enter the date that the check bounced.
4. In the “Payment Method” field, choose Check (or leave blank).
5. Enter a notation in the Reference number field, for example, NSF Fee.
6. From the Account column, select the “Bank Charges” item.
7. In the Amount column, enter the amount the bank charged you for the bounced check.
8. Click Save.

Receiving A New Payment

1. Click the “+” icon and choose Receive Payment.
2. Enter the new payment information.
3. Under Outstanding Transactions you will see the New Invoice you created, click the check-box next to the correct item.
4. Click Save.

By creating the new Product and Service of “NSF Check” and linking it to the original Bank Account instead of an Income account, it will reverse the check in your bank register. When you create the New Invoice for the fees they still owe you and then Receive new payment a new deposit amount is created.