There are a few thing to set up ahead of time in order to track this Create an Other income, Other Current Asset account, and an item to track the bounced check and their charges. You should record it in order to match the reality what happened in the bank account which will make your account reconciliation match. In order to account for this properly we are assuming the payment is recorded as deposited in the Bank in QuickBooks. If you are using QuickBooks Online, you will need to record this manually, Here are the steps.
But how do you track that in QuickBooks? Fortunately QuickBooks Desktop has a built in Bounce Check Feature, automatically handled for you. You can decide to charge your client for any fee that you incurred when they pay you again. This is a challenge because you have already attempted to deposit the money and the reality is that the bank will withdrawal that amount from your account, plus a fee and your client still owes you for the original payment. This can happen for a variety of reasons, but essential there is not enough funds in the checking account when the money is attempted to be withdrawn. In the old days we called that a Bounced Check, but today, we have a softer way to call it, an NSF Check (non-sufficient funds). Uh Oh!! A customer paid you and the payment didn’t go through.
