How do I account for a payment that has bounced, been refunded or has been returned?
This article explains how to reconcile erroneous bank statement transactions that may occur when a payment bounces, is refunded or is returned.
In this article:
Erroneous bank statement transactions
From time to time, there may be erroneous entries on your bank statement. This is usually where a payment has bounced, been placed incorrectly due to a bank error, or been rejected for some other reason. A common reason can be a rejected cheque.
On most occasions where this happens, you will see a pair of matching entries, one credit, and one debit, rectifying the error.
How to reconcile these transactions
(1) You should record the outgoing payment as a 'Bank / Processing Fee', making sure to un-check the 'Remember this Transaction' box.
(2) You should match the incoming amount as a 'Supplier Refund' to the same expenditure category, making sure to un-check the 'Remember this Transaction' box.
Combined, these two matched transactions will have £0 effect on the total for that expenditure category.
To better understand the Bank Reconciliation module, please view the module overview video here.