How to Record a Bounced Check in QuickBooks

A bounced check throws off your bank balance and your accounts receivable at the same time. If a customer's check comes back for insufficient funds, or your own check bounces because of an NSF fee, QuickBooks won't fix the books for you. Here's how to handle bounced checks in QuickBooks Online and QuickBooks Desktop, plus how to handle the fee.

Does QuickBooks Online Catch a Bounced Check Automatically?

No. QuickBooks Online doesn't flag or reverse a bounced check on its own. When a bank fee or a returned payment shows up in your bank feed, you still need to record it using one of the methods below. QuickBooks Desktop is different. It includes an automated Record Bounced Check feature that handles the reversal and fees for you, which we walk through later in this post.

Three Ways to Record a Bounced Check in QuickBooks Online

When a customer's check bounces, QuickBooks Online (QBO) gives you 3 ways to record it: an expense, a journal entry, or an invoice. Intuit's own guidance calls the expense method the easiest of the 3, so start there unless you have a specific reason to use a journal entry or invoice instead. If you're not sure which fits your books, a bookkeeper or accountant can help you decide.

Record a Bounced Check Using an Expense

1. Go to All apps, then Accounting, then Bank transactions.

2. Find the bounced check on the Reviewed tab and select it to expand the details.

3. From the Vendor/Customer dropdown, select the customer whose payment bounced.

4. From the Account dropdown, select Accounts Receivable, then select Add.

5. Open the customer's payment record, clear the checkbox for the original invoice, and check the new expense you just created instead.

6. Save your changes. This reopens the original invoice.

From there, invoice the customer for any bank fees using a service item, then send a Balance Forward statement showing both the reopened invoice and the fee.

Record a Bounced Check Using a Journal Entry

Intuit flags this method as more involved than the expense method, so use it if you specifically prefer journal entries.

1. Create a journal entry dated the day the check bounced. Debit Accounts Receivable for the check amount and assign the customer's name, then credit your bank account.

2. Add a note in the Memo field explaining the reason for the entry, then save.

3. Go to the customer's transaction list, clear the checkbox linking the payment to the original invoice, and link it to the journal entry instead.

4. Record the bank's NSF fee as an expense to your Bank Charges account.

5. Invoice the customer for the fee using a bounced check fee service item, then send a statement.

Record a Bounced Check Using an Invoice

This method works well if you'd rather keep the bounced check and its fee together on one document.

1. Create 2 service items ahead of time: one named "Bounced check," tied to the bank account you used to receive the payment, and one named "Bounced check fees."

2. Create an invoice for the customer, add the Bounced check item for the check amount, and add the Bounced check fees item for whatever you're charging them.

3. Send the invoice, then record the bank's NSF fee separately as an expense against the same income or expense account you used for the fee item.

4. When the customer pays the new invoice, record it as you normally would using Receive Payment.

Charging Your Customer a Bounced Check Fee

Yes, you can charge a customer a bounced check fee to help cover the bank charges you were hit with. There's no requirement to do this, and how much you charge is entirely up to you, but most businesses set an amount that at least covers the bank's NSF fee. Whichever method you use above, the fee gets its own line item so it's clearly separate from the original payment in your accounting records.

Recording a Bounced Check in QuickBooks Desktop

QuickBooks Desktop for Windows includes a Record Bounced Check feature that automates most of this. From the Customer Center, open the original payment under Received Payments and select Record Bounced Check. Enter the bank fee and any customer fee, review the summary, and finish. QuickBooks reverses the payment, marks the invoice unpaid, and creates the fee invoice automatically.

If the automated feature isn't available for your transaction, you can record the bounced check manually with a journal entry that debits accounts receivable and credits your bank account, then relink the payment to that entry. QuickBooks Desktop for Mac uses a similar Bounced Check option directly from Receive Payment.

Keep Your Accounting Accurate From the Start

Recording a bounced check is a normal part of bookkeeping, but the fewer surprises in your bank account, the less reconciliation work you'll have. If misprinted or misaligned checks are adding to your accounting headaches, our QuickBooks Checks & Forms are guaranteed to work with QuickBooks Online and Desktop, so what prints matches what QuickBooks expects.

Order QuickBooks-compatible business checks from Check Depot, guaranteed to work with your software.

---

FAQs About Recording a Bounced Check in QuickBooks

How do I record a bounced check in QuickBooks Online?

Use one of 3 methods: an expense, a journal entry, or an invoice. Each reopens the original invoice and reverses the payment from your bank account. The expense method is the simplest to set up.

Does QuickBooks Online have an automatic bounced check feature?

No. QuickBooks Online requires you to record a bounced check manually using an expense, journal entry, or invoice. QuickBooks Desktop includes an automated Record Bounced Check feature.

What are the three ways to record a bounced check in QBO?

You can record it using an expense, a journal entry, or an invoice. Intuit calls the expense method the easiest of the 3, so it's a good default unless a journal entry or invoice better fits how your books are set up.

Can I charge my customer for a bounced check fee?

Yes. You can invoice the customer for a fee to help cover your bank's NSF charge. The amount is up to you, and it should be entered as its own line item separate from the original payment.

How do I record the bank's NSF fee?

Record it as an expense against your Bank Charges account, or the income account tied to your bounced check fee item, depending on which method you used to record the check itself.

How do I record a bounced check in QuickBooks Desktop?

Use the Record Bounced Check feature from the Customer Center. Open the original payment under Received Payments, select Record Bounced Check, enter the bank fee and any customer fee, and finish. QuickBooks reverses the payment, marks the invoice unpaid, and creates the fee invoice for you.

What steps should I follow to record a bounced check from a customer in QuickBooks?

Reverse the original payment using an expense, journal entry, or invoice, reopen the invoice, record the bank's fee, and invoice the customer for any fee you're charging them. Then record their new payment once it clears.