How to record a bounced check in QuickBooks: three things have to reverse
A bounced customer check means the invoice must look unpaid again, the deposit must come back out, and the bank fee needs recording. Desktop has a built-in flow. Online mostly does not.
Verdict
Three things must reverse: the invoice goes back to unpaid, the deposit comes out of your books, and the bank fee gets recorded as an expense. Desktop has a guided flow. Online is largely manual.
Three things have to reverse#
Get one wrong and your books are wrong in a way that is hard to spot later.
Invoice, deposit, fee
The three reversals a bounced check needs
Miss the invoice and receivables are understated. Miss the deposit and cash is overstated.
1. The invoice must look unpaid again. The customer still owes you. If the invoice stays closed, the debt vanishes from your receivables and nobody chases it.
2. The cash must come back out. Your bank took the money back. Your books need to agree.
3. The bank fee needs recording. Your bank charged you for the returned item. That is a real expense.
First, check it actually bounced#
In QuickBooks Desktop#
Desktop has a proper flow for this.
Open the original customer payment, then use the Record Bounced Check option. It walks you through reversing the payment, reopening the invoice, and adding the bank fee.
Use it. It is more reliable than doing the pieces yourself, because it keeps the links between the transactions intact.
In QuickBooks Online#
There is no equally complete guided version, so you do the three steps yourself.
Step 1: reopen the invoice#
Find the payment that closed the invoice and reverse or delete it. The invoice returns to unpaid and starts ageing again, which is what you want, because the customer genuinely still owes you.
Step 2: take the cash back out#
If the payment was part of a bank deposit, that deposit no longer matches what your bank shows. Edit the deposit to remove the bounced payment, or delete and rebuild it if that is cleaner.
The mechanics, and what happens to the other payments in the same deposit, are in how to delete a deposit.
Step 3: record the bank fee#
+ New → Expense.
- Reference: NSF fee
- Category: Bank Charges
- Amount: what your bank actually took
Keep it as its own transaction. Do not net it against anything.
Billing the fee back#
If your terms allow it, raise a new invoice to the customer for the NSF fee. Keep it separate from the original invoice, which should stay exactly as it was.
Two invoices, two things owed. That is easier to collect and easier to explain than one adjusted invoice nobody can reconcile against the original.
If it never gets paid#
A bounced check is not automatically bad debt. It is an unpaid invoice again, and it ages like any other.
If it eventually becomes uncollectable, write it off properly rather than deleting it, which we cover in how to write off bad debt.
The order that works#
1. Confirm it actually reached the bank.
2. Reverse the payment so the invoice reopens.
3. Fix the deposit so cash matches the bank.
4. Record the NSF fee as its own expense.
5. Decide whether to bill the fee back.
Doing them out of order, particularly fixing the deposit before reversing the payment, tends to leave orphaned transactions that are harder to untangle than the original problem.
The short version
What works
- QuickBooks Desktop has a dedicated bounced-check flow that handles all three steps
- Recording the bank fee separately makes it easy to bill back to the customer later
- Once reversed, the invoice ages normally again so it appears in your receivables reports
What does not
- QuickBooks Online has no equally complete guided flow, so most of it is manual
- Missing one of the three steps leaves either income or cash overstated
- A check still sitting in Undeposited Funds cannot bounce, and treating it as bounced makes things worse
Frequently asked questions
- How do I record a bounced check in QuickBooks Online?
- Reverse the payment so the invoice shows unpaid again, remove or reverse the deposit so the cash leaves your books, then record the bank fee as an expense categorised to Bank Charges. QuickBooks Online has no single guided flow for this, so each step is done separately.
- Does QuickBooks have a built-in bounced check feature?
- QuickBooks Desktop has a Record Bounced Check flow on the original payment that walks through reversing the payment and adding the fee. QuickBooks Online is less complete, so in practice you record the reversal and the expense yourself.
- How do I record the NSF fee my bank charged me?
- Create an expense. Put NSF fee in the reference field, categorise it to Bank Charges, and enter the amount your bank actually took. Keep it as its own transaction rather than netting it against the customer payment, so it is easy to find and easy to bill back.
- The check is still in Undeposited Funds. What now?
- Then it has not bounced, because it never reached your bank. A check can only bounce after it has been deposited and returned. If it is sitting in Undeposited Funds, the payment should simply be deleted or corrected rather than treated as a bounced check.
Written by
Tashawar Awais
Researcher and editor
Tashawar handles verification and editing. Every figure in a review is checked a second time before it goes out, and anything that cannot be traced to a vendor page or a documented source is either qualified or cut. Where pricing is genuinely unclear, as it is with Canva team plans or Close CRM tiers, the article says so and tells the reader to confirm directly instead of quoting a number with false confidence.
- Second check on every published figure
- Removes claims the sources do not support
- Flags pricing that changes without notice