--- title: "Customer's check payment returned for non-sufficient funds (NSF)" slug: "accounting-process-for-bounced-checks-recommended-workflow" updated: 2026-07-14T19:33:48Z published: 2026-07-14T19:33:48Z canonical: "help.servicetitan.com/accounting-process-for-bounced-checks-recommended-workflow" stale: true --- > ## Documentation Index > Fetch the complete documentation index at: https://help.servicetitan.com/llms.txt > Use this file to discover all available pages before exploring further. # Customer's check payment returned for non-sufficient funds (NSF) ![](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/anvil-wrench.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) Troubleshooting **Role:** Administrator · Bookkeeper · Office Admin**Area:** Accounting, Invoicing, Payment Collections · All product versions ## **What you're seeing** A customer paid an invoice by check, you recorded the payment, and the invoice shows fully paid. Later the bank returns the check for non-sufficient funds (NSF), so the money you recorded never actually arrived. The invoice still shows paid and your Accounts Receivable is overstated, and you may also need to charge the customer a returned-check fee and collect a replacement payment. This can affect a single check or several at once. ## **Why this happens** **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. ## **Which workflow applies to you** There are two ways to record a returned check, depending on your account setup: - If you use **Payment Collections**, you must have the Automated Refund Workflow enabled, and you record the returned check through that automated path. See [**Set up automated refund workflow**](https://help.servicetitan.com/docs/set-up-automated-refund-workflow). - If you **do not use Payment Collections**, follow the manual steps in this article. > [!NOTE] > **Note:** When the Automated Refund Workflow is enabled, automated refunds replace the need to manually create negative payments and adjustment invoices. The manual steps below are the recommended method for accounts that do not have the Automated Refund Workflow enabled. ## **Before you start** You need **Accounting** and **Payments** permissions access to create payment types and add adjustment invoices. If you don't have it, contact your admin. ### **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." ![NSF Check payment type setup with Export as set to Journal Entry](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-nrjdkdfj.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) > [!NOTE] > **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. > [!NOTE] > **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. > [!NOTE] > **Note:** If you need to record the NSF payment against a pending invoice, a configuration must be enabled to allow adjustment invoices on pending invoices. Contact your admin to turn it on. ## **How to fix it** These manual steps apply to accounts without the Automated Refund Workflow. If you have the Automated Refund Workflow enabled, record the returned check through that workflow instead (see **Which workflow applies to you** above). Recording a returned check has up to three parts. Always complete Part 1. Do Part 2 only if you're charging a returned-check fee, and Part 3 only when the customer pays again. ### **1****Record 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**. ![Original check payment showing Posted or Exported status](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-ul2ed1lv.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) 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**. ![Negative NSF Check payment on the adjustment invoice](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-wr4cfblj.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) > [!NOTE] > **✓ 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). ![Invoice showing a balance due again after the negative payment](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-pwfphcr3.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) > [!NOTE] > **Note:** An adjustment invoice is visible to the customer if you print or send the invoice. ### **2****Charge 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**. ![Returned Check Fee service item in the pricebook](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-kae10sec.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) 2. On the original invoice, click **Add an adjustment invoice** and add the returned-check fee service item. ![Adding the returned-check fee to an adjustment invoice](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-bm88dl3f.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) > [!NOTE] > **✓ Done ·** The invoice now reflects the original service and payment, the returned check, and the returned-check fee. ![Invoice reflecting the original service, returned check, and returned-check fee](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-p4h6jkoc.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) ### **3****Re-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] > **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**. ![Temporary placeholder task added to the invoice](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-3c8474ks.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) **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**. ![Applying the replacement payment from the Credits section](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-hn610ily.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) **Remove the placeholder task:** 1. Click the **x** next to the placeholder task. 2. Click **OK** when prompted. ![Removing the placeholder task from the invoice](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accounting-process-for-bounced-checks-recommended-workflow-image-54xhg22e.png?sv=2026-02-06&spr=https&st=2026-10-12T22%3A10%3A59Z&se=2026-10-12T23%3A10%3A59Z&sr=c&sp=r&sig=oNHCmcF6amtfZDn%2FaxwGEPy8OwXbmNt7YbZZxkltLls%3D) > [!NOTE] > **✓ 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. ## **Still not working?** Contact ServiceTitan Technical Support at [**go.servicetitan.com/ask**](https://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 ## **Want to learn more?** [**Returned or NSF check payment needs to be reversed on an invoice ›**](https://help.servicetitan.com/docs/how-to-add-a-negative-nsf-check-payment-to-invoices) How to add a negative NSF check payment to invoices. [**Invalid check payment applied to multiple invoices ›**](https://help.servicetitan.com/docs/remove-invalid-check-pmt-from-multi-invoices-and-apply-pmt) Remove an invalid check payment from multiple invoices and re-apply payment. [**Invoice missing from the list of applicable invoices for a check payment ›**](https://help.servicetitan.com/docs/invoice-missing-from-list-of-invoices-for-check-payment) What to do when an invoice doesn't appear in the list of invoices for a check payment. [**View bounced checks (ACH returns) in SmartPay ›**](https://help.servicetitan.com/docs/view-bounced-checks-ach-returns-in-smartpay) How to view bounced checks and ACH returns in SmartPay. [**Set up automated refund workflow ›**](https://help.servicetitan.com/docs/set-up-automated-refund-workflow) How to set up the Automated Refund Workflow for Payment Collections.