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Bad Check Procedure
Overview:
This document will go through the steps of handling a bad check. Topics included in this article:
- What is the procedure for a bad check payment received through the contract?
- What is the procedure for a bad check payment received through account payments?
- How do I edit bad check letters?
- How do I edit bad card letters?
Prerequisites:
You must set up a Disbursement Item called "Bad Checks" or "Returned Checks" (refer to the Disbursement article) before using the Account Payments method. Note: If the check was posted through Account Payments, skip to the second section about payments received through Account Payments.
What is the procedure for a bad check payment received through the contract?
Go to Counter System > Tools > Bad Check Procedure.
1. Enter the check number and the amount in the appropriate boxes. You must enter both.
2. Select the check you want to back out.
Click on the customer’s name and you will receive the following message: “Do you want to back out check # __ in the amount of $ ___.”
Note: If you get an error message “Error! You must use Account Payments to back out a check received through Account Payments.,” skip to the next section about if the payment was received through Account Payments.
3. Next, you will be prompted to enter the bad check service charge. The amount you enter will go into the “Other” field on the contract (the “Other” field will not generate sales tax; be careful). You may prefer a Returned Check Fee item to add to the contract (marked as taxable). In that case, enter zero in the amount. When you are done with the Bad Check Procedure, modify the contract and add the Returned Check Fee item.
4. If the customer re-submits the payment, modify the contract and make the payment as you normally would.
What is the procedure for a bad check payment received through account payments?
1. From the Program Menu, choose #3 Accounts Receivable.
2. Select Account Payments.
3. Choose the customer the check was originally posted to.
4. Choose to Make a Payment.
5. From the Payment Screen refund the negative (-) Payment Amount for the amount of the returned check.
6. Select the payment method of Credit Memo and click OK.
7. You will be asked “Is the payment amount correct?” Answer Yes.
8. Select the Bad Check, NSF, or Returned Check disbursement item (you may need to create this Disbursement Item. See the Disbursement How to Guide for help).
9. Enter any comments you may have and press OK.
10. Now you can unpay the appropriate contracts by entering a negative number in the Payment Amount field.
11. If you do not see your contract, it may have already gone to history. Simply click the Historical Button at the bottom of the payment screen and choose the contract.
12. Once all contracts have been unpaid the Funds Remaining at the bottom of the screen should be zero.
13. Press OK to finish.
14. You may want to add your Returned Check Fee item to one of the contracts.
If done correctly, your end-of-day cash drawer balancing will not be affected and the accounting office will get the accounting entries that reduce the bank account by the amount of the returned check.
How do I edit bad check letters?
Go to Program Menu > Accounts Receivable > Bad Check Letter.
This selection prints a letter to the customer whose check has been returned to your company by the bank or whose credit card has been charged back. When you select the Bad Check Letter from the Accounting menu, you will see the following screen:
Clicking Edit Check Letter allows you to update your bad check letter. Note: If one does not exist, you will be asked if you would like to create one.
How do I edit Bad Card Letters?
Clicking Edit Card Letter from the Check Selection screen allows you to update your credit card letter. Note: if one does not exist, you will be asked if you would like to create one.
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