How do we handle an NSF cheque (bounced cheque) from our customer?

We know that a bounced cheque reduces our bank account by the amount of the cheque plus the bank fees associated with the returned cheque. We also know that the accounts receivable must go up, because the customer still owes the money. You will probably want to charge the customer a fee for bouncing the cheque.

We need to set this up in the items. How do we do that? Go to our post called Setup NSF Cheque. After you set up the Service, do the following steps.

1. Make an invoice dated on the day that the bank deducted the amount of the bounced cheque.
2. Record the fee that the bank charged as a result of the NSF cheque. Use the Expense window.
3. Charge your customer a service fee for handling NSF cheques. Call it Income from NSF Cheque Processing

Setup

Make a new account in the chart of accounts. Video 12.