How To Record a Bounced Check in QuickBooks Online | QBO Tutorial | The Home Bookkeeper

Summary

In this tutorial, Emily, a home bookkeeper, guides viewers through the process of recording a bounced check in QuickBooks Online. Using a sample scenario, she demonstrates how to properly adjust the bank balance, reopen the invoice, and account for any NSF (Non-Sufficient Funds) fees charged by the bank. Emily also explains how to charge the customer for the bounced check and manage NSF fees through QuickBooks' invoicing and expense features. This tutorial is ideal for business owners and freelance bookkeepers seeking efficient ways to manage returned payments and maintain accurate financial records.

Takeaways

• 😀 You can record a bounced check in QuickBooks Online efficiently while maintaining a proper paper trail.
• 😀 The tutorial uses a sample scenario involving Craig's Landscaping and a customer, Kathy, to demonstrate the process.
• 😀 To handle a bounced check, create an expense entry to decrease the bank balance and increase accounts receivable.
• 😀 After a check bounces, reopen the original customer invoice to reflect the payment status and send the invoice to the customer again.
• 😀 You need to record an NSF (Non-Sufficient Funds) fee charged by your bank as an expense, which can also be billed to the customer.
• 😀 Create a service item in QuickBooks for the NSF fee so it can be added to customer invoices and tracked separately.
• 😀 When creating the NSF service item, select an income account and enter the charge amount for the returned check.
• 😀 The bank's NSF fee should also be recorded by selecting the bank account and the NSF service item during an expense entry.
• 😀 If you wish to bill the customer for the NSF fee, mark the expense as 'billable' and link it to the corresponding customer.
• 😀 After recording the NSF fee, you can generate an invoice to charge the customer for the bounced check and the NSF fee.
• 😀 QuickBooks Online helps businesses manage bounced checks by adjusting the bank balance and tracking associated fees, which keeps accounting accurate.

Q & A

What is the main focus of Emily's channel?

Emily's channel focuses on helping business owners and freelance bookkeepers navigate QuickBooks Online, while also providing insights into business ownership and finance.

How does Emily recommend recording a bounced check in QuickBooks Online?

Emily suggests recording the bounced check by creating an expense that decreases the bank account balance and increases accounts receivable, since the customer now owes the business again.

What steps are involved in reopening an invoice after a check bounces?

To reopen an invoice, you need to go to the customer’s transaction list, find the original invoice, uncheck the payment received, and check the box next to the bounced check instead. Then save the changes.

What is the purpose of recording the NSF (Non-Sufficient Funds) fee in QuickBooks Online?

Recording the NSF fee helps businesses track additional costs incurred due to bounced checks and ensures accurate accounting for both the bounced check and the associated fee.

What is the process for setting up an NSF service item in QuickBooks Online?

To set up an NSF service item, go to 'Products and Services,' create a new service item, name it (e.g., 'NSF Fee'), and specify the amount to charge the customer. You also need to set up the relevant income and expense accounts.

What do you need to do if you want to bill a customer for the NSF fee?

If you want to bill the customer for the NSF fee, you must select 'Billable' under the expense entry. This will allow the fee to appear on the customer's invoice.

How do you apply the NSF fee to a customer invoice in QuickBooks Online?

To apply the NSF fee, create an invoice, select the customer whose check bounced, and then add the billable NSF fee. This will automatically populate the invoice with the NSF fee details.

What does Emily emphasize about the importance of adjusting your QuickBooks bank balance after a bounced check?

Emily stresses that it's essential to adjust your QuickBooks bank balance immediately after a bounced check to reflect the correct amount and avoid overstating the bank balance.

What steps are involved in creating an expense for the NSF fee in QuickBooks Online?

To record an NSF fee, create an expense entry, select the bank that charged the fee, choose the NSF service item you created, and enter the details. If it's billable, mark the 'Billable' checkbox and select the customer.

How can businesses use QuickBooks Online to manage bounce checks effectively?

QuickBooks Online helps businesses manage bounced checks by allowing them to adjust bank balances, track NSF fees, and bill customers for the bounce check, ensuring proper accounting and reconciliation.