Processing Returned Checks

See the appropriate topic to handle returned checks:

• Returning a Single Check
• Returning Part of a Summarized Check Deposit
• Redepositing a Check

When you run the Returned Checks utility, the processing that takes place depends on which option is selected on the Accounts Receivable Parameters form:

• If the Generate Debit Memo per Invoice check box is selected on the Accounts Receivable Parameters form:
  • One debit memo is created in the original transaction currency for each invoice to reverse the payment amount for that invoice.
  • Two distribution rows are created. The first is for the actual amount of the check, crediting the cash account. The second is for the discount amount, crediting the early pay discount account.
  • If the Generate Returned Check Fee check box is selected on the Bank Reconciliations form and a Returned Check Fee Type of Amount is selected, a second debit memo is created in the original transaction currency for the returned check fee amount.
  • If the Generate Returned Check fee check box is selected on the Bank Reconciliations form and a Returned Check Fee Type of Percent is selected, a debit memo is created in the original transaction currency for the fee amount associated with each invoice paid off by the check being returned. Each debit memo is for the amount of the invoice multiplied by the fee percentage.
  • You must run Invoice Posting to post the debit memo(s) generated by the Returned Checks utility. This creates journal entries to book the offset of the returned check and discount amounts. The fee amount is also booked.
• If the Generate Payment Adjustment for Returned Checks check box is selected on the Accounts Receivable Parameters form:
  • One negative amount adjustment is created in the bank currency, to show the invoice amount as still being due.
  • A payment adjustment distribution record is created in the bank currency to offset the payment and any associated discount amount.
  • If the Generate Returned Check Fee check box is selected on the Bank Reconciliations form and a fee type of Amount is selected, a debit memo is created in the customer currency for the returned check fee amount.
  • If the Generate Returned Check Fee check box is selected on the Bank Reconciliations form and a fee type of Percent is selected, a debit memo is created in the customer currency for the fee amount associated with each invoice paid off by the check being returned. Each debit memo is for the amount of the invoice paid off by the check multiplied by the fee percentage.
  • A/R Adjustment Posting needs to be executed to post the negative check adjustment created by the Returned Checks utility. This creates journal entries to book the offset of the returned check and discount amounts.
  • You must run Invoice Posting to post any debit memo(s) created for the returned check fee. This creates journal entries to book the fee amount.