How to deal with a cheque deposit that was rejected by the bank?

You may have received income via a cheque that you paid into your bank but that was later rejected because the cheque bounced, perhaps due to insufficient funds from the donor, or because the cheque details were incomplete. This article will help you reconcile this transaction within ExpensePlus.

  1. Bank match the first income transaction (bounced cheque)

On the bank matching screen, select the income transaction and match this as you usually would. If you have entered the deposit already via the Bank Deposit screen (recommended), then when you select this transaction in the left-hand table, it will automatically reconcile to the corresponding Bank Deposit in the right-hand table. 

Alternatively, when you select the income transaction in the left-hand table, click the + button, then select Bank Deposit

Warning: Whichever way you bank match this income transaction, because the cheque was rejected, it should not be recorded as a 'Named Donation' or 'Invoice Payment' (even if this is what it was for). Instead, you should select 'Other Income' to avoid it showing up as a donation and being eligible for Gift Aid or the invoice it relates to incorrectly showing as paid.

If you need to correct the bank deposit, you should do so at this point by reopening the deposit, deleting the line for this cheque from the 'Named Donation' or 'Invoice Payment' section, and adding it to the 'Other Income' section.

  1. Bank match the outgoing transaction

When the bank rejects a cheque, it will show as an outgoing amount on your bank statement. To bank match this transaction, select it in the left-hand table on the bank matching screen, click the + button that appears, and select the 'Income Repayment' option. This will create a negative income.

You should select the same fund/category for this transaction as you did for the corresponding income amount (step 1, above). The two transactions will correctly net each other out as a result.

If a second cheque is then produced, you should bank match this as usual.

To help you better understand the Bank Deposit module as a whole, please visit the module overview page here.

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