How to Handle a Customer Bad Check in QuickBooks

Follow the procedure below to record the returned item in your bank account balance and to reissue an invoice to your customer:

Create two new items for tracking bounced checks and their associated charges

  • Go to the Lists menu and click Item List
  • Click Items at the bottom of the list and then click New

Create an Other Charge item titled Bounced Check

  • In the Amount field, leave a zero amount
  • From the Tax Code list, choose Non
  • In the Account field, choose your bank account
  • Click Next

Create a second Other Charge item titled Bad Check Charge for the service charge you pass on to your customers for bounced checks

  • In the Amount field, leave a zero amount
  • From the Tax Code list, choose Non
  • In the Account field, choose an income account, such as Returned Check Charges. If the account doesn’t exist, set it up now in your Chart of Accounts
  • Click OK.

Use the items created to reinvoice the customer for the bounced check, plus any bank fees you want to recover. Note: Because the Bounced Check item is linked to your bank account, this will reduce your bank account by the amount of the bounced check, and will back out the original transaction on your books. The income for the original sale will be recorded when you receive the new customer payment.

  • Click Customer Center
  • On the Customers & Jobs tab, select the customer with the bounced check
  • Right-click and choose Create Invoices
  • For the first line item on the invoice, use the Bounced Check item for the amount of the bad check.
  • For the second line item on the invoice, use the Bad Check Charge item for the amount of any bank fees that you want to recover.
  • Complete the invoice, as usual

Did you know that QuickBooks has a Bounced Check letter that you can send along with the new invoice?

  • ¬†¬†Select the customer in the Customer Center
  • Go to the Word menu at the top of the Customer Center and click Prepare Letter to Customer
  • Follow the onscreen instructions in the Letters and Envelopes wizard
  • In the Choose a Letter Template window, choose Bounced Check