Help CenterQuickBooks Online - NSF - Returned Checks/ACH Transactions - Manual Process
When a customers check gets returned by the bank (NSF) the payment needs to be removed from the invoice so it will show in the collection center to be processed for new payment.
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- It is important not to edit the payment that was originally tied to the invoice because it may have been in a prior accounting period.
- RECUR360 has an automation process to handle this, but here are manual instructions:
Recur360's Method
There are multiple ways to record the bounced/NSF check/ACH from a customer.
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- Our automations go through the process of creating a seperate invoice tied to a clearing account, moving the payment to that invoice leaving the original invoice open to take the payment.
- If you would like to manually record the NSF/Bounce in this manner there are a few things that would need to be set up in QuickBooks first.
One Time Setup in QuickBooks Online
NSF Clearing Account
If you do not have an NSF clearing account set up, you will want to start there. In QuickBooks Online click settings- Chart of accounts.
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- Click the green 'New' button in the upper right.
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- Enter the Account name and the account type. The account type will need to be a 'Bank' type for the clearing account.
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- Then click the green 'Save' Button at the bottom.
QuickBooks Items
To finish setting this up you will need 2 new parts in your QuickBooks Item list:
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- In QuickBooks the first product/service is NSF Invoice item:
Note: The NSF Return item should NOT be linked to a Sales income account - this item will be used to invoice for the return and should be linked to a "Bank" type GL account (above you see it is linked to an NSF Clearing Account). This way you can track the balance in the NSF Clearing account and zero the GL account back out when Recur360 records the payment being deducted from your bank deposit.
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- In QuickBooks the second product/service item is an NSF fee.
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- If you just created these items in QuickBooks, you will need to Sync Data in Recur360 so they will be available to select.
Create the NSF Invoice
This can be done in QuickBooks or Recur360 after the web connector is run to sync the clearing account and items.
To create it in Recur360 create a new invoice for the customer and for the item select your newly created item.
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- Remember to make the amount the amount of the bounced/NSF check/ACH.
Move the Payment
In order for the original invoice to be made "open" to receive a new payment you will want to open the payment in QuickBooks and move it to the NSF invoice you just created.
If you do not see that invoice and it was created in QuickBooks, click process transactions in the top right of Recur360, then run the web connector.
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- Once the payment is attached to the new NSF invoice the original invoice is ready for a new payment.
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- We also recomend setting up the automations since you will already be halfway done after these steps.
QuickBooks Online Method
For QuickBooks Online you would create a new invoice. The steps for that are here:
Step 1: Enter the bounced check as an expense
The first step is to enter the bounced check as an expense:
- Select + New.
- Select Expense
- In the Payee field, select the name of the customer who's check bounced.
- From the Payment Account dropdown, select the account the money was supposed to go into.
- In the Payment date field, enter the date you found out the check bounced.
- Select and open the Category details ▼ dropdown.
- In the Category field, select Accounts Receivable.
- In the Amount field, enter the amount of the bounced check.
- In the Description field, enter a note, such as "bounced check" or "NSF check."
- When you're done, select Save and close.
This expense offsets the unpaid invoice.
Step 2: Unapply the bounced check payment from the original invoice
The next step is to change the bounced check entry and make the original invoice open again. We aren't changing the original invoice, we're disconnecting the bad payment:
- Go to the Sales or Invoicing menu.
- Select the Customers tab.
- Find and select the name of the customer who's check bounced.
- Find select the record for the bounced check.
- In the Received payment window, select and uncheck the box for the original invoice the bad check was attached to.
- Select the checkbox for the expense you just created in "Step 1: Enter the bounced check as an expense."
- Select Save and close.
You removed the bad check from the original invoice, made the invoice open again, and applied the accounting you did in Step 1. To double-check:
- Go to the Sales or Invoicing menu.
- Select the Customers tab
- Find and select the name of the customer who's check bounced.
- Look for the original invoice and check the Status column. It should now say "Open."