Q: How do I document a returned check?

A: The instructions for documenting a returned check (and any associated fees) are different based on whether the original invoice has been posted or not. This article gives instructions for both scenarios.

Instructions

Non-Posted Invoices

Note: This method can also be used for posted invoices that still have pending payments.

1. Add a refund to the invoice for the amount of the returned check. This will add the amount of the returned check back to the open balance on the invoice.
   
   

2. Create a separate invoice for the bank fees.

Posted Invoices

1. Create a new invoice.

2. Add a line item. TIP! Some people create a non-taxable item in their price list for returned checks, others just use a miscellaneous code.

3. Use a quantity of "-1" and enter the dollar amount of the returned check.

4. Next, add a refund in the amount of the bounced check to the newly created invoice. You can either use "check" method or "other." Your invoice total should now be $0. TIP! If your invoice isn't $0, most likely tax is being calculated. Either use a non-taxable item or change the invoice sales tax to your exempt (0%) tax rate.

5. Go back to the invoice line items and add another item with a quantity of "1" and positive amount for the returned check.

6. You can also add a line item for the bank fees.
   
   

7. Apply another payment to the invoice for the amount you have received to cover the bounced check and bank fees.