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How do I enter an NSF check and returned check fee?

NSF stands for non-sufficient funds. A check that draws an amount on an account that does not have an account balance greater than the amount drawn is an NSF check. In addition to the check amount, the bank may charge a returned check fee to cover the check processing fees.

What happens when a check is NSF

  • The payee tries to deposit or cash the check. 

  • The bank rejects it due to insufficient funds in the issuer's account. 

  • The check is marked NSF and returned to the payee (often with a fee).

  • The amount is reversed from the payee's bank account or marked as uncollected.

 

How it's handled in accounting

  • The payment that was previously recorded from the check is reversed. 

  • A debit is made back to the customer's account or accounts receivable. 

  • A bank fee may be recorded as an expense (for example, returned check fee). 

  • The customer may be notified and charged an NSF fee.

 

 

Entering an NSF check and returned check fee

1. Open Connect Cash Receipting > Payments > Enter Payments.

2. Use the Category field to enter the category code for returned checks.

3. Use the Distribution field to enter the distribution code for an NSF check. Then, enter the original check amount as the Distribution Amount. The cursor returns to the Distribution field.

4. Now, use the Distribution field to enter the distribution code for a returned check fee. Press Enter. The cursor moves to the Payments portion of the Enter Payments screen.

5. Finally, record the payment of the NSF and returned check fee. Select the Payment Type. Then, enter the paid amount in the Amount field.

The NSF Check and Returned Check Fee are recorded.

 

 

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