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Q. I received a notice from the bank that a customer’s
check has been returned. What is the best way to handle
it?
A. Unfortunately, as a part
of doing business, occasionally you may received an NSF
check from one of your customers. 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. The best way I’ve found to handle it is to:
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Create an ‘Other Charge’
Item called “Bounced Check or NSF”, in the
description field I usually say something like “Your
check # has been returned, please remit replacement
payment immediately”, for the Account enter your
Checking account.
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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.
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Create an “Other Charge”
Item called “NSF Fee” and charge the customer for
any service charge you received from my bank. You
can put this to your account for ‘Bank Service
Charges’ to offset what your bank charged you or to
a ‘Misc. Income’ account.
When the customer sends a
replacement check, Receive Payment as usual and make
your deposit.
What you don’t want to do,
is to delete the returned check from the original
deposit. You did deposit the check and that can’t be
changed. The above instructions allow 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.
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