Just because a customer writes you a check doesn’t necessarily mean you will receive the funds. For instance, the customer may not have the appropriate amount of funds in their account, at which point the check will either bounce or be returned with a “NSF” label. Either way, you’ll need to address this issue in your Quickbooks account to ensure the balance is correct. Taking a few minutes to record NSF and bounced checks will allow for a smoother reconciliation process.
I can’t stress enough the importance of recording NSF and bounced checks in your Quickbooks account. If you overlook the critical element, it could result in unaccounted fees to your business account. Once this happens, it can throw your entire balance out of order, making it even more difficult to reconcile your account in the future. The bottom line is that you must record any NSF or bounced checks you receive from customers.
The first step is to log into your Quickbooks account and click on the “List” tab followed by “Item List.” From here, click on the “Item” tab from the drop-down menu and select “New.” Now, click “Type” from the drop-down menu and select “Other Charge.” This will bring up a new box that allows you to manually enter a name for the charge, such as “bounced check.”
Since the customer’s check was bad, select “$0.00” in the amount field. Click on the “Tax” tab and select “Non.” Next, select the “Account” tab from the drop-down box and choose your bank account. If you have multiple business bank accounts, select the one associated with the bad check. If a customer wrote a bad check to business account A, then you’ll want to select business account A. You will then have to choose another name for the bad check. To help keep things organized, it’s recommended that you choose the same, or similar, name as previously used.
Select the “Account” tab from the drop-down menu once again and select the income amount. Most banks use the same fee structure for bounced or NSF checks, so you should find the income amount listed here. In the rare event that it’s not listed here, you can choose “Add New” from the drop-down menu to manually enter in the amount. After the amount is entered, click on “Next” to save the items. The fee associated with the customer’s bad check should now be recorded in your Quickbooks.