Record a Bounced Check in QuickBooks: NSF Payments and Fees

To record a bounced customer check in QuickBooks, reverse the original payment so the invoice reopens, take the returned amount back out of your bank, and post the bank's NSF fee as an expense. QuickBooks Desktop has a Record Bounced Check button that does it for you; in QuickBooks Online you use an expense, invoice, or journal entry.

Last updated July 2026.

Here is the situation this guide covers: a customer paid an invoice by check, you deposited it and marked the invoice paid, and days later the bank returned it for non-sufficient funds. Now the money is gone, the invoice looks paid but is not, and the bank charged you a returned-item fee. Three things have to happen in your books, plus an optional fourth: reverse the payment so the receivable is open again, account for the cash leaving your bank, record the bank's NSF fee as an expense, and, if you want, bill the customer a returned-check fee. Below is how to do each part in both QuickBooks Online and QuickBooks Desktop, and how to keep the bank feed from double counting it all.

What happens to the invoice when a customer's check bounces?

Nothing changes automatically. QuickBooks still shows the invoice as paid and still shows the deposit in your bank register, because it has no way of knowing the bank pulled the money back. Until you reverse the payment, your accounts receivable is understated and your bank balance is overstated. Reversing the bounced check reopens the invoice and restores the customer's balance due. This is not a bad-debt write-off: the customer still owes you, and the debt only becomes bad debt if they never make good on it.

How do I record a bounced check in QuickBooks Online?

QuickBooks Online does not have the same single button as Desktop across every plan, so Intuit supports a few reliable methods. The cleanest is the expense method. Select +New, then Expense. Set the Payment account to the bank the check was originally deposited into, and set the Payment date to the day the bank returned the check. On the first line, choose the Accounts Receivable (A/R) category, enter the customer's name in the Name field, and enter the amount of the returned check. That single move pulls the cash back out of your bank and reopens the customer's invoice at the same time. On a second line of the same expense, choose your Bank Charges expense account and enter the fee the bank charged you. Save, and both the returned amount and the bank fee are handled in one transaction.

You can also do this as a journal entry (debit A/R for the customer, credit the bank), but the expense method is the fastest to get right.

How do I record a bounced check in QuickBooks Desktop?

QuickBooks Desktop has a dedicated tool. Go to Customers, Customer Center, open the Transactions tab, and select Received Payments. Double-click the payment for the check that bounced. On the Receive Payments window, select the Record Bounced Check icon on the Main tab. A few conditions have to be met first: you need to be in single-user mode, the payment method must be Check, and the check has to have already cleared into your bank (a check still sitting in Undeposited Funds never hit the bank to bounce).

In the Manage Bounced Check window you enter the bank's NSF fee and, optionally, a fee to charge the customer, then select Next and Finish. QuickBooks marks the original invoice unpaid, creates a journal entry to reverse the payment, deducts the bank fee, and, if you entered a customer charge, creates a Bounced Check Charge invoice. It also creates a Returned Check Charges income account if one does not already exist.

Steps to reverse a bounced customer payment

Here is the expense-method sequence for QuickBooks Online, laid out step by step. Follow the same logic in Desktop and the Record Bounced Check button does most of it automatically.

How do I record an NSF fee in QuickBooks?

Treat the two NSF fees differently, because they land on opposite sides of your books. The fee your bank charges you is a business expense: code it to your Bank Charges (or Bank Service Charges) account, the same account you use for wire fees and monthly maintenance charges. If you want a deeper walkthrough of that account and how to categorize every charge on a statement, see our guide to recording bank fees in QuickBooks. The fee you charge the customer is the opposite: it is income to you, usually booked to an Other Income account such as Returned Check Charges. Keeping them separate means your profit and loss shows the real cost and the real recovery instead of netting them into one confusing number.

How do I charge a customer for a returned check in QuickBooks?

In Desktop, the Manage Bounced Check window has a field for the amount you want to charge the customer, and QuickBooks builds the invoice for you. In QuickBooks Online, create a service item (call it something like NSF Fee or Returned Check Fee) mapped to an Other Income account, then make a new invoice to that customer and add the item for whatever your policy allows. Check your state's rules and your own terms before you set the amount, since returned-item fees are regulated in many states. This invoice is separate from the reopened one, so the customer ends up with two open balances: what they still owe you and the fee.

How do I handle a bounced check on the bank feed?

This is where most people double count. When the bank returns the check, two things show up on your statement and in the bank feed: the returned deposit (money leaving) and the NSF fee (a separate charge). If you already recorded the reversal and the fee using the steps above, do not add these feed lines as new transactions. Match them to what you already entered. In QuickBooks Online, open Transactions, find the returned-deposit line and the fee line in the For Review tab, and use Match to tie them to the expense you created. Adding them fresh would remove the money twice and expense the fee twice.

If you are cleaning up months of activity rather than working live, the returned deposit and the fee are simply two lines to categorize when you import the statement. Our walkthrough on importing bank statements into QuickBooks covers the mechanics, and when your bank or credit union will not feed cleanly you can convert the PDF statement to a QuickBooks-ready file first with our PDF bank statement to QuickBooks Online importer. Over a full year of catch-up, if returned-item charges and monthly bank fees pile up, a tool that automatically reads and categorizes every charge that hits the account keeps them from getting lost.

QuickBooks Online vs Desktop: bounced check handling

Both apps get you to the same place; the difference is how much QuickBooks does for you.

Frequently asked questions

Does recording a bounced check remove the deposit I already entered?

No. The original deposit stays in your books because it did happen; the bank accepted the check before returning it. Reversing the bounced check adds a new transaction that takes the money back out, rather than deleting the deposit, which would break your reconciliation for the period it cleared. For a refresher on entering deposits correctly, see our guide to recording a deposit in QuickBooks.

Is a bounced check the same as bad debt?

Not usually. A bounced check just means the payment failed, so you reopen the invoice and the customer still owes you. It only becomes bad debt if the customer never pays and you decide to write the balance off, which is a separate step using a bad-debt expense account and a credit memo.

What date should I use for the reversal?

Use the date the bank returned the check and pulled the money, which is the date on your statement. Matching that date keeps your bank register in step with the statement and makes reconciliation clean.

The bank fee is on my statement but I entered it separately. What do I do?

Match, do not add. Find the fee line in the bank feed and match it to the Bank Charges expense you already recorded. If you let QuickBooks add it as a new transaction, you will expense the same fee twice and your bank balance will be off by that amount.

Can I do all of this without the Desktop button?

Yes. The Record Bounced Check button is a shortcut, not the only way. In any version you can reproduce the result with an expense to Accounts Receivable for the returned amount, a Bank Charges line for the fee, and an optional invoice for a customer fee. To categorize the returned item and fee faster at scale, many users convert the statement first with our QBO file converter.