How to Record a Returned Check in QuickBooks

When a customer's check bounces or you write a check that your bank returns, your books no longer match reality. The payment shows as received in QuickBooks, but the money is not in your account. This guide covers all steps for recording returned checks in QuickBooks Desktop 2022 through 2026 and QuickBooks Online so your records stay accurate and your invoices stay collectible. Most cases are resolved in under 5 minutes using the built-in tools.

What Is a Returned Check in QuickBooks?

A returned check, also called a bounced check or NSF (non-sufficient funds) check, is a check that a bank refuses to honor because the account it draws on does not have enough money to cover the amount. Banks return checks to the depositing party and typically charge both accounts a fee, often $25 to $35 or more per item.

From a bookkeeping standpoint, a returned check creates a two-sided problem. When you deposited the check, QuickBooks marked the related invoice as paid and increased your bank balance.

When the check bounces, your bank pulls that money back, but QuickBooks still shows the invoice as paid and the deposit as valid. The records no longer match your actual bank balance.

The same problem exists in reverse if you wrote a check to a vendor that your bank returned. QuickBooks shows the bill as paid, but your vendor has not been paid and your bank balance was never reduced as expected.

Recording the return correctly restores the invoice to open status, removes the deposit from your books, accounts for any bank fees, and gives you the ability to re-invoice the customer for the original amount plus any fees you choose to pass along.

Why Recording Matters

Skipping or incorrectly recording a returned check causes problems that compound over time. Your accounts receivable will show a lower balance than you are actually owed. Your bank reconciliation will fail each month until the transaction is corrected.

If you write off the customer's invoice without recording the return properly, you lose the ability to document the outstanding debt accurately.

Most banks charge an NSF fee of $25 to $35 per returned item, and some charge the fee to both the depositor and the account owner. Those fees show up on your bank statement and must be entered in QuickBooks to keep your reconciliation clean. In addition, many businesses charge their own returned-check fee to the customer, typically $25 to $50, which requires creating a new invoice.

Getting this right the first time saves hours of reconciliation work later.

Record a Returned Check in QuickBooks Desktop

QuickBooks Desktop has a dedicated tool for handling returned checks received from customers. It automates most of the work and handles the accounting entries for you.

Step 1 - Open the Receive Payments Window

Go to Customers > Receive Payments from the top menu bar. This opens the payment register where all received customer payments are listed.

Step 2 - Locate the Payment

Search for the customer whose check was returned. You can type the customer name in the Received From field or scroll through the list. Find the specific payment that included the bounced check and open it.

Step 3 - Click the Record Bounced Check Button

With the payment open, look at the ribbon across the top of the window. Click Record Bounced Check. This opens the Manage Bounced Check dialog.

Step 4 - Enter the Bank Fee

In the Bank Fee field, enter the amount your bank charged for the returned item. This is the fee the bank charges you, not a fee you pass to the customer.

Step 5 - Set the Date

Use the Date field to enter the date your bank assessed the fee. You can type the date directly or use the calendar dropdown.

Step 6 - Select the Expense Account

Use the Expense Account dropdown to choose the account where bank service charges are tracked. If you do not have a specific account for bank fees, choose your general bank charges or service fees account.

Step 7 - Handle Class Tracking (if applicable)

If your company file uses class tracking, select the appropriate class from the Class dropdown. This step only appears if class tracking is enabled in your preferences.

Step 8 - Enter the Customer Fee

In the Customer Fee field, enter the amount you want to charge the customer for the returned check. This is separate from the bank fee and is optional. If you decide to charge a fee, QuickBooks will create a new invoice for this amount automatically.

Step 9 - Click Next

Click Next to advance to the Bounced Check Summary screen. Review the transactions QuickBooks will create, including the journal entries to reverse the payment and the new fee invoice if applicable.

Step 10 - Click Finish

Click Finish to complete the process. QuickBooks automatically marks the original invoice as unpaid, removes the deposit from your bank register, records the bank fee as an expense, and creates a new invoice for the customer fee if you entered one.

Step 11 - Save and Close

Click Save and Close to exit the Receive Payments window. The customer's account now shows the original invoice as open and any new fee invoice as outstanding.

Record a Returned Check in QuickBooks Online

QuickBooks Online does not have a one-click Record Bounced Check tool, so the process involves three separate transactions. Each step must be completed in order.

Step 1 - Record the Reduction in Your Bank Account

This entry reduces your bank balance to reflect the funds being pulled back.

1. Click the + New button in the top left corner
2. Under the Vendors column, select Expense
3. In the Payee field, select the customer whose check was returned
4. In the Payment Account field, choose the bank account where you originally deposited the check
5. Set the Date to the date your bank notified you of the return
6. Set Payment Method to Check
7. In the Category field, choose Accounts Receivable
8. Enter a description that identifies this as a returned check entry
9. Enter the full amount of the returned check
10. Click Save and Close

Do not delete the original payment receipt. Removing it eliminates the paper trail and will cause your bank reconciliation to fail.

Step 2 - Reopen the Original Invoice

The original invoice was marked paid when the check was deposited. Now it needs to return to open status so you can collect payment again.

1. In the left menu, go to Sales > Customers
2. Find and click the customer whose check was returned
3. In the customer's transaction list, locate both the original invoice and the original payment you recorded
4. Click the original payment to open it
5. On the payment screen, check the box next to the expense you created in Step 1
6. Uncheck the box next to the original invoice
7. Click Save and Close

The invoice status will now show as Open or Overdue in the customer's transaction list.

Step 3 - Record the NSF Fee

You need to create a service item for the NSF fee before you can add it to an invoice. If you have already done this for a previous returned check, skip to the billing step.

Create the NSF fee service item (first time only):

1. Go to Settings > Products and Services
2. Click New and select Service
3. Name the item something like "NSF Fee" or "Returned Check Fee"
4. Check the box that says you sell this service to customers
5. Enter the description that will appear on your customer's invoice
6. Enter the default amount you charge customers for returned checks
7. Select the income account to track these fees
8. Check the box that says you purchase this service from a vendor
9. Enter the amount your bank charges you for NSF items
10. Select an expense account for the bank fee
11. Click Save and Close

Create the NSF fee invoice:

1. Click + New and select Invoice under the Customers column
2. Choose the customer whose check was returned
3. Add the NSF Fee service item to the invoice
4. Confirm the amount and description
5. Click Save and Send to email the invoice to the customer, or Save and Close to save it without sending

Record a Check You Wrote That Was Returned

If you wrote a check to a vendor and your bank returned it, the resolution mirrors the customer process but runs through the vendor section of QuickBooks.

Work through these actions in order:

• Unapply the original payment from the vendor bill
• Create a new bill under the vendor to account for the returned check
• Apply the original returned check to the new bill
• Add the bank fee to the vendor bill
• Pay the outstanding vendor bill once the issue is resolved and funds are available

When your own check bounces, contact the vendor as soon as you know. Most vendors will work with you if the situation is handled promptly and does not become a recurring issue.

Common Mistakes to Avoid

Deleting the original payment: This removes the audit trail and distorts your bank reconciliation. Always use the Record Bounced Check process instead of deleting.

Forgetting the bank fee: The NSF fee on your bank statement needs to match an expense entry in QuickBooks. Missing it means your reconciliation will not balance.

Recording the return to the wrong date: Use the date the bank notified you of the return, not the original deposit date. The bank statement entry will be on the return date, and your QuickBooks entry must match.

Not re-invoicing the customer: After a check bounces, the customer still owes the original amount plus any fees. Confirm the invoice is open and visible in the customer's account before closing out the transaction.

When to Call Support

If the Receive Payments window in QuickBooks Desktop does not show the Record Bounced Check button, your payment may have been entered as a sales receipt rather than an invoice payment. In that case, the button will not appear and you will need to handle the reversal manually using journal entries.

If you are not comfortable with manual journal entries, contact support before making changes.

You should also contact support if:

• Your bank reconciliation remains out of balance after completing all steps
• The customer's account receivable balance does not change after recording the return
• You see QuickBooks error messages during the Record Bounced Check process
• You are unsure which accounts to use for the bank fee or customer fee entries

Reach QuickBooks support phone number or visit the QuickBooks Help menu and select Contact Us to connect with Intuit's support team directly.