Customer's check payment returned for non-sufficient funds (NSF)

 Troubleshooting
Role: Administrator · Bookkeeper · Office AdminArea: Accounting, Invoicing, Payment Collections · All product versions

Reason 1

The bank reversed a payment you already recorded.

The bank returned the customer's check for non-sufficient funds, so a payment you already recorded as received was reversed. Until you record that reversal in ServiceTitan, the invoice shows paid and your Accounts Receivable does not reflect the money you're still owed.

One-time setup — create an NSF Check payment type

Go to Settings, create a new payment type named NSF Check, set Export as to Journal Entry, set Account to your bank account, set Attributes to None, and click Save. Setting Export as to Journal Entry is what allows the type to export negative payments; a payment type that is not set up this way produces the error "Negative AR Payment is not supported. Please update your payment type to AR Adjustment if you want to create an AR Adjustment Debit Memo."

Note: The AR Adjustment path referenced in that error message is a separate debit-memo workflow and is not required here. For the returned-check workflow, the Journal Entry export type is correct.

Caution: Do not use the Bounced Check button in QuickBooks. It automatically creates the journal entry described below, which would duplicate the transaction coming from ServiceTitan.

1Record the returned check

Always complete this part.

1. Search for and open the invoice the check paid.

2. Confirm the original check payment has a status of Posted or Exported.

    

3. Click Add an adjustment invoice.

4. On the adjustment invoice, add a negative payment for the same amount as the returned check.

5. Select the NSF Check payment type (or your equivalent).

6. In the Memo field, add a note about the returned check, such as the check number and reason.

7. Click Save.

    

✓ Done · The original payment is canceled out and the invoice shows a balance due again. The NSF Check payment exports to QuickBooks as a journal entry — a debit to Accounts Receivable (increase) and a credit to your bank account (decrease).

Note: An adjustment invoice is visible to the customer if you print or send the invoice.

2Charge a returned-check fee (optional)

Do this only if you're charging the customer a returned-check fee.

1. In your pricebook, create a service item for the returned-check fee if you don't already have one, such as Returned Check Fee.

    

2. On the original invoice, click Add an adjustment invoice and add the returned-check fee service item.

    

✓ Done · The invoice now reflects the original service and payment, the returned check, and the returned-check fee.

3Re-apply the customer's replacement payment

Do this only when the customer pays again.

When the customer pays again, the invoice balance comes only from the negative payment, so the invoice won't appear under Collect and apply payment until it has a positive line item. Add a temporary placeholder task to create a balance, apply the payment, then delete the placeholder so no extra revenue is recorded.

Note: The placeholder task is needed because a balance won't appear on the Collect and Apply Payments screen without a supporting line item. This is a known product behavior.

Add a temporary placeholder task:

1. On the invoice, click Add a task.

2. In the Name field, type at least one letter to bring up pricebook items, then select one.

3. Change the Unit Price to match or exceed the payment you need to apply.

4. Click Save.

    

Apply the payment:

1. Click Collect and apply payment.

2. Open the Credits section and select the payment(s) to apply.

3. Click Apply to Invoice and choose the invoice.

4. Click Save.

    

Remove the placeholder task:

1. Click the x next to the placeholder task.

2. Click OK when prompted.

    

✓ Done · The replacement payment is applied to the invoice and the placeholder task is removed, so no extra revenue is recorded and the invoice balance reflects reality.

Contact ServiceTitan Technical Support at go.servicetitan.com/ask with:

• The customer name and invoice number(s)

• The returned check's amount, date, and check number

• Whether you use Payment Collections and the Automated Refund Workflow

• Whether the original check payment had already been exported to your accounting system

• The NSF Check payment type's export setup, or a screenshot of it

• Which parts of this article you already completed