When a payment transaction is made but later not collected—such as a check returned for insufficient funds—specific accounting entries must be made to maintain accurate financial records. The recommended approach is to add records to account for the discrepancy rather than deleting the transaction. Deleting transactions removes the long-term reference record, which is not advised. Always consult with your organization’s business officials to determine the best approach.
Handling Uncollected Checks and Credit Cards
Use this process when a check or credit card payment is accepted but later declined or returned for insufficient funds.
Steps:
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Locate the Original Payment Transaction:
- Go to the Client Payment transaction.
- Add any necessary reference notes regarding the declined payment.
- Save the changes.
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Create a New Payment Transaction:
- Select the Client and Assignment.
- Set the Payment Type to "Uncollected Funds."
- Enter the Amount equal to the original payment that was not collected.
- Fill in other fields as needed for reference.
- Save the record.
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Review Balance Due:
- The Uncollected Funds amount will now recalculate back into the Balance Due.
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Future Payments:
- If the Client repays any portion of the uncollected amount, treat these as new transactions.
- If the Client is unlikely to pay, enter an invoice line item credit to clear the Balance Due for this Client/Assignment.