Receiving an NSF check from one of your customers can be an unfortunate reality of doing business.

You received a notice from the bank that one of your customer’s checks has been returned. Most business at one time or another has experienced this. You need to take the monies out of your checking account and also put it back on the customer’s account to show that they still owe you. One way to handle this is as follows:

1. Create an Item in Quickbooks select Other Charge and call it Bounced Check or NSF. In the description field you can say “Your check # has been returned, please remit replacement payment immediately.” For the Account enter your Checking account.

2. Now, Invoice the customer for the Item Bounced Check and enter in the check #, Invoice # and other information about the check. This takes the money out of your checking account and puts it back on the customer A/R

3. Create an Other Charge Item called NSF Fee and charge the customer for any service charge you received from your bank. You can use the account for Bank Service Charges to offset what your bank charged you or can use Misc. Income account.

4. When the customer sends a replacement check, Receive Payment as usual and makes your deposit.

You do not t want to delete the returned check from the original deposit, that may seem the easiest thing to do but you did deposit the check. If you delete it your deposits in QuickBooks will not match the bank statement. Creating the items and recording the NSF allows you to keep your original deposit intact, subtract the amount of the returned check from your checking account and record who owes you for the returned check