We don’t wish certain things but they do happen. Bounced checks are part of most of businesses. In many files we have seen how people struggle and finally fumble to bring effect of bounced checks into QuickBooks.
There are three aspects to be brought into QuickBooks when a check is returned
- To increase the receivable because when the check was entered receivable was reduced. So because of the check return our receivable from the customer needs to be increased , in other words, brought to pre-receipt of check
- Banks do charge for an NSF check. We should get this amount from customer
- Most of the times we also do charge customer for check return and associated handling cost
CREATING QUICKBOOKS ITEMS REQUIRED TO HANDLE NSF CHECK:
This step is required to be done only once in the QuickBooks file
NSF Check Item: Go to the Lists, Item List, New Item, Choose ‘Other Charge’ Name the Item ‘NSF Check’, Leave the amount as ‘zero’ (We are creating an open item so that whatever the amount the item can be used), in the Account drop down choose the account into which checks are deposited into. (Different Items have to be created for each bank account. Logic is simple. Items link the accounts.)
NSF Check (BANK) Fee Item: (for Bank charges) Just like the way NSF Check Item created, crate another Item and name it ‘NSF Check Charges’. (We need to recover charges levied by bank)
NSF Check (OUR) Charges Item: (for Company Charges to customer) Now you are an expert in creating Items. Link this item to Income a/c NSF Check Charges
(Needed to do for every NSF check)
ENTER CREDIT MEMO TO NULLIFY ORIGINAL INVOICE IN QUICKBOOKS
- Go to Customers>Enter Credit Memo/Refunds>Choose Customer>
- Enter all the items entered in original invoice including Sales Tax if any
- Choose ‘NSF Check’ Item WITH A NEGATIVE AMOUNT
(If NSF check is only part payment of the invoice, please enter only check amount)
(Since you have entered original invoice amount and then NSF check as negative amount total of the Credit Memo will be zero. By B QuickBooks reduces the Sales/Income /Sales Tax and by C QuickBooks will reduce the balance in bank)
SEND A FRESH INVOICE
We need to get the payment from customer for original invoice, bank charges and also for our charges. Let us invoice him
- Press CTRL+I . QuickBooks will open the invoice window.
- Enter all the items as per the original invoice
- Enter NSF check (BANK) Fee Item
- Enter NSF check (OUR) CHARGES) Item
When you receive the payment check, receive the check as usual (Customers>Receive Payments>Choosing Received from and choosing the invoice and saving).
Now no fear. Even if the check bounced again you need not bounce. You can comfortably take the above steps and tell QuickBooks what to do.
FOR ADVANCED QuickBooks USERS
For experts like you QuickBooks offers additional opportunity to refine and put your command over QuickBooks to fine tune reports
As soon as the second invoice is raised go to ‘Customer Payment’ window. It was used to pay our original invoice. Now change it to second invoice. As a result original invoice becomes pending/due so that QuickBooks will correctly pull up AR Aging Reports