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Handling Rubber Checks
in QuickBooks |
When a customer's check is returned for insufficient funds, you can handle it as follows:
In QuickBooks, create items for tracking bounced checks and their associated charges (a one-time setup process). First create an Other Charge item titled "NSF Check". In the Amount field leave a zero amount, choose to make the item non-taxable for sales tax purposes, and enter your bank account in the Account field.
Create another Other Charge item titled "NSF Fee". Enter the desired charge to your customer in the Amount field, choose to make the item non-taxable, and enter an income account, such as Returned Check Charges, in the Account field.
When you receive a notice from your bank that a customer's check has been returned, simply create an invoice to your customer using the NSF Check and NSF Fee items. To help you quickly identify an NSF invoice, enter "NSF" in the invoice # field. Even if the original sale did not represent a receivable, it does now!
Then record any fees associated with the returned check. You can enter the fees using the Write Check window (with no check number), or you can make an entry directly into the bank account register.
This process creates a receivable for the bounced check amount (plus applicable fees), and deducts the NSF check amount and bank charges from your bank account. When you receive a replacement check from your customer, just receive payment as usual!
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