Handling Customer Bounced Checks in QuickBooks Online

This article addresses how to apply a bounced customer payment check to the customer’s accounts receivables account in QuickBooks Online.

In this scenario:

A customer’s check payment to you has bounced due to insufficient funds in the customer’s bank account. The bank then deducts the funds back out of your account, after crediting you with these funds, say, two days before.

So now, you need to figure out a way to apply this deduction from your account into your own books. Your ultimate bookkeeping goal here is to put the original customer invoice back into an outstanding receivable status (open status).

So, let’s get started here:

1. Go to the bank’s deduction (for the bounced check) in your bank account.
   1. Be careful that the bank has not deducted an additional bank fee for this bounced check. If that is the case, then you will need to split this bank charge off of the customer’s bounced check amount (if you are not going to recoup these bank fees from the customer as well).
2. Within this bank deduction (for the bounced check), the category to post this will be to “Accounts Receivable”.
   1. Be sure the Payee name at the top is the customer’s name.
3. Now go to your customer’s profile and find the original (1^st) payment you applied to the customer’s invoice.
4. Within this “Receive Payment” screen, you will need to un-apply the payment to the original invoice and, instead, apply it to the returned funds expense now showing in the customer’s accounts receivables.
   1. You can accomplish this by checking the “expense” bounced check and un-checking the original invoice (to apply this original payment to).
5. Click on Save and Close.
6. Now you will notice the original invoice is now in an Unpaid status.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.