Tip #288-Bad Checks

Tip #288
Bad Checks

There are times when a customer’s check will come back as “Insufficient Funds” along with the amount your bank is charging you for processing that check.  Hopefully, this will not happen to you often.  But if it does, in most cases (if not all) you will want to recoup these bank charges from the customer.  This post will tell you how to do that.

First of all, there are 2 different types of bad checks, the ones entered through the accounts receivable module and the ones entered at the point of sale module.

Let’s start by saying that you should never accept a check from a customer through a “999” sale because if the check “bounces” there is no way for you to recoup the money.
I would not even accept a check from a customer if I don’t have a backup credit card to charge in case the check is no good.

Most “bad” checks will be entered through the A/R module and that is why there is a specific menu option to handle them.


Upon selecting this option, you will be presented with the following screens…


You will need to enter the account number and the correct check number of the “bad” check.  This should be easily available to you from the bank but if it is not you can always find it through the A/R module.  Once you have the correct account and check number entered, flowerSoft will allow you to continue…


flowerSoft will supply the check amount and let you enter the bank charge you want to recoup.  It then informs you of the total amount the customer will be charged back.

Since this is a check entered through the A/R module, it will have one or more ON ACCOUNT invoices linked to it.  So instead of adding a new charge for $220.oo in this example, what flowerSoft will do is void the payment, restoring all the original outstanding amounts for the invoices it paid, and then just add an additional charge for the bank charge.


If you go and look at the original payment, you will see that it has been marked as void.


So if you now look into the customer’s account, you will see that the payment is not even shown but a charge back amount is now visible.


That is how you handle a payment made through the A/R module when the check comes back as “Insufficient Funds” or any other reason for that matter.

However, if the “bad” check was accepted through the POS module, we need to use a different method to charge back the customer.

First you need to bring up the invoice that was paid with the “bad” check.
Once you have it on the screen, you will need to update the record and indicate why you are doing so…


Next, you will need to navigate to the products screen and add a line item for the chargeback…


In order to add what the bank charged you for the returned check, you will need to have an item code for the chargeback.  The code name and description is entirely up to you but you must make sure that it is marked as a tax free item.


Once you have an item code for the chargeback, you can enter it on the next available line in the order.


By the way, you can make the chargeback amount to the customer greater than what the bank charged you if you want to cover your additional expenses.

Once this line item is added, you must change the method of payment from check, to either ON ACCOUNT or CREDIT CARD if you have a backup credit card for this customer.  Remember that since flowerSoft does not store credit card numbers,  to have a backup credit card for the customer, the customer must have made a previous purchase using a credit card.

So now you must go to the method of payment screen and change the method of payment to ON ACCOUNT or CREDIT CARD.


Notice that the order is still a taxable order and that even though the Subtotal amount has changed to $90.00, the taxable amount remains at $60.00 and the Sales Tax amount remains the same as it was.

Those are the steps needed to charge the customer back for a returned check accepted through the POS module.  A little more complicated than a check accepted through the A/R module but still a fairly simple process.

The one thing to remember is that you must make your chargeback item code as a tax free item, otherwise flowerSoft would calculate sales tax on $90.00 instead of $60.00

If you have any questions or comments, please let me know.







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