Accounting Process for Bounced Checks: recommended workflow

If a customer pays for their service by check and that check is later returned by the bank for non-sufficient funds, you will need to enter a record of that transaction in ServiceTitan to maintain accurate Accounts Receivable.

Note: You must have the automated refunds workflow set up in order for an NSF payment to be recorded in ServiceTitan.

Things to know

• Do not use the 'Bounced Check' button in QuickBooks, which automatically creates the journal entry described below and would require you to bypass the negative payment from ServiceTitan in order to not duplicate the transaction.

Workflows

Setup

1. Create a new payment type: NSF Check        

   1. Export as: Journal Entry

   2. Account: your bank account

   3. Attributes: None

   4. Click Save.

Note: If you are using Payment Collections, you must turn on Automated Refund Workflow. For more information, see Set up automated refund workflow.

Without Payment Collections Turned On

To record the transaction of the returned check on your invoice in ServiceTitan:

1. Search for and go to the invoice in question.

2. Make sure the payment has a status of Posted or Exported. 

3. Click Add an adjustment invoice.

4. On the adjustment invoice screen, add a negative payment in the same amount of the NSF check.

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

6. Add a note on the Memo field about the NSF check.

7. When finished, click Save. 

This essentially cancels out the first payment and the invoice again reflects a balance due.

The negative payment/NSF Check payment from ServiceTitan exports to QuickBooks as a journal entry, with a debit to Accounts Receivable (increase) and a credit to your Bank Account (decrease).

Charge an NSF Fee

1. If you would like to charge a fee to your customer for the returned check or perhaps pass on the fee that you were charged by the bank, you will first need to create an item for this in your pricebook. 

2. Add an adjustment invoice to the original invoice and add the Returned Check Fee service item. Your invoice is now updated to reflect the original services and payment, returned check, and bad check fee.

Apply a new payment to the balance

In order to address the new balance that has been created on the adjustment invoice, you need to add a temporary task with a positive price total to create a balance. From there, you can apply payments and then delete the task, ensuring that no additional revenue is being recorded.

To add a dummy task:

1. Click Add a task on the left side.

2. Type at least one letter into the Name field to bring up pricebook items.

3. Change the Unit Price to match or exceed the positive payment that you need to apply to this invoice.

4. Click Save. 

To apply a payment to the invoice:

1. Click Collect and apply payment.

2. Click the Credits section and select the payment(s) that need to be applied to the invoice.

3. Click Apply to Invoice and select the invoice.

4. Click Save. 

To delete the dummy task from the invoice:

1. Click the x next to the task.

2. Click OK when prompted. 

Related Content

• View bounced checks (ACH returns) in SmartPay

• Handle Non-Sufficient Funds (NSF) or bounced check from customers