A cheque you received earlier and captured in the system for sales can be dishonoured.
To properly keep records, don’t reverse the transaction by deleting the cheque. You should rather enter a reversing transaction and file the bounced cheque.
To properly record a bounced cheque follow this;
- Locate the Sales invoice for which the returned cheque was issued.
Click on the amount in blue (Balance Due) . It will show the history of the invoice which will show the entry of the bounced cheque.
You will have to enter a receipt transaction on the invoice but with a negative amount. So click on receive money button and enter the reversal information.
Make sure you get the bank account right else your Bank reconciliation will be impossible.
The invoice # will load by default.
Balance receivable on invoice is back to unpaid.
- Check the balance on the invoice after the reversal.
My Tip: Issue an invoice always to a customer who is going to pay with a cheque even if the customer will make immediate payment with the cheque and not a straight forward receipt which is not based on a sales invoice. A reversal of the cheque receipt will leave the balance in account receivable in the event of dishonoured/stopped/void/stale cheques.
I intentionally made all the dates of the entries different to arrange the transactions in a way to make it easy to see the effect. Ideally, enter the reversal with the date of issuing the invoice so that all late payment fees will not be affected. I’m yet to see the effect of this on late payment fees though.
You can use the same work flow for Purchases invoice you pay with a cheque.