[GNC] How to handle bounced check

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[GNC] How to handle bounced check

Mike Alexander
A few weeks ago I received a check in payment for an invoice I had sent to a customer.  I recorded the payment and deposited the check.  A couple of weeks later I got notice from my bank that the check had bounced.  My question is how to record this.  I want to “unpay” the invoice and charge the amount back to the customer, but I can’t find a good way to do this.

I tried entering a transaction to debit Accounts Receivable and credit the bank account after which I manually added the split in A/R to the lot for that invoice.  This sort of worked, but the invoice is still marked paid in the customer report.  I can, however, select it in the “Process Payment” dialog to pay it again and it shows up as unpaid in the receivables aging report.  Can I do better than this?

           Mike

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Re: [GNC] How to handle bounced check

Christopher Lam
I think this is difficult. Creating and posting invoice will create an open
lot, and paying the invoice closes the lot; I'm not sure there is mechanism
to reopen the lot. I think it would be useful to document the exact steps
to pay & unpay in bugzilla and further internal discussion takes place
there?

On Sat., 2 Feb. 2019, 12:26 Mike Alexander <[hidden email] wrote:

> A few weeks ago I received a check in payment for an invoice I had sent to
> a customer.  I recorded the payment and deposited the check.  A couple of
> weeks later I got notice from my bank that the check had bounced.  My
> question is how to record this.  I want to “unpay” the invoice and charge
> the amount back to the customer, but I can’t find a good way to do this.
>
> I tried entering a transaction to debit Accounts Receivable and credit the
> bank account after which I manually added the split in A/R to the lot for
> that invoice.  This sort of worked, but the invoice is still marked paid in
> the customer report.  I can, however, select it in the “Process Payment”
> dialog to pay it again and it shows up as unpaid in the receivables aging
> report.  Can I do better than this?
>
>            Mike
>
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Re: [GNC] How to handle bounced check

elvis-5
In reply to this post by Mike Alexander
I think from memory when I had allocated payments to the wrong invoice,
I just deleted the payment split in the bank register - which also
deleted the payment in invoices

Everything went back to as it was before the payment was made, which
seems to be what you want.

On 2/2/19 2:24 pm, Mike Alexander wrote:

> A few weeks ago I received a check in payment for an invoice I had sent to a customer.  I recorded the payment and deposited the check.  A couple of weeks later I got notice from my bank that the check had bounced.  My question is how to record this.  I want to “unpay” the invoice and charge the amount back to the customer, but I can’t find a good way to do this.
>
> I tried entering a transaction to debit Accounts Receivable and credit the bank account after which I manually added the split in A/R to the lot for that invoice.  This sort of worked, but the invoice is still marked paid in the customer report.  I can, however, select it in the “Process Payment” dialog to pay it again and it shows up as unpaid in the receivables aging report.  Can I do better than this?
>
>             Mike
>
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Re: [GNC] How to handle bounced check

GnuCash - User mailing list
In reply to this post by Christopher Lam
I think its like a bank fee, the bank took the money out. Not the customer. However you should re-invoice the customer for the amount due, but as a service charge and not for the original item sold. The downside would be your item/service sales would be overstated if the customer never settles up.

Sent from ProtonMail mobile

-------- Original Message --------
On Feb 2, 2019, 12:38 AM, Christopher Lam wrote:

> I think this is difficult. Creating and posting invoice will create an open
> lot, and paying the invoice closes the lot; I'm not sure there is mechanism
> to reopen the lot. I think it would be useful to document the exact steps
> to pay & unpay in bugzilla and further internal discussion takes place
> there?
>
> On Sat., 2 Feb. 2019, 12:26 Mike Alexander <[hidden email] wrote:
>
>> A few weeks ago I received a check in payment for an invoice I had sent to
>> a customer. I recorded the payment and deposited the check. A couple of
>> weeks later I got notice from my bank that the check had bounced. My
>> question is how to record this. I want to “unpay” the invoice and charge
>> the amount back to the customer, but I can’t find a good way to do this.
>>
>> I tried entering a transaction to debit Accounts Receivable and credit the
>> bank account after which I manually added the split in A/R to the lot for
>> that invoice. This sort of worked, but the invoice is still marked paid in
>> the customer report. I can, however, select it in the “Process Payment”
>> dialog to pay it again and it shows up as unpaid in the receivables aging
>> report. Can I do better than this?
>>
>> Mike
>>
>> _______________________________________________
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>> To update your subscription preferences or to unsubscribe:
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
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Re: [GNC] How to handle bounced check

Mike Alexander
In reply to this post by elvis-5
I’ve deleted payments before too when they were recorded incorrectly.  This isn’t quite the same thing.  I need to keep both the payment and the charge back.  Otherwise I can’t accurately reconcile my bank account.  Both transactions will appear in the statement (perhaps not even on the same statement) and both need to be reconciled.  I want to keep the deposit and record the charge back.

           Mike

> On Feb 1, 2019, at 11:45 PM, elvis <[hidden email] <mailto:[hidden email]>> wrote:
>
> I think from memory when I had allocated payments to the wrong invoice, I just deleted the payment split in the bank register - which also deleted the payment in invoices
>
> Everything went back to as it was before the payment was made, which seems to be what you want.
>


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Re: [GNC] How to handle bounced check

David Cousens
In reply to this post by Mike Alexander
Mike

Simnply delete the payment transaction. This will leave the invoice open and
still awaiting payment.

The other approach you could take if you want to maintain a full accounting
trail would to be to create a reversing transaction for the payment, duly
annotated. This will leave the original invoice in place but the reversing
trannsaction won't be tied specifically to the invoice in the way the
original payment was. You could then reissue a new invoice, adding the
dishonour fee and any interest charges you specified in your original
invoice terms and conditions.

David Cousens



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Re: [GNC] How to handle bounced check

GnuCash - User mailing list
In reply to this post by Mike Alexander
On 02/02/2019 04:24, Mike Alexander wrote:
> A few weeks ago I received a check in payment for an invoice I had sent to a customer.  I recorded the payment and deposited the check.  A couple of weeks later I got notice from my bank that the check had bounced.  My question is how to record this.  I want to “unpay” the invoice and charge the amount back to the customer, but I can’t find a good way to do this.
>
> I tried entering a transaction to debit Accounts Receivable and credit the bank account after which I manually added the split in A/R to the lot for that invoice.

my opinion is you are overthinking this

 >This sort of worked, but the invoice is still marked paid in the
customer report.  I can, however, select it in the “Process Payment”
dialog to pay it again and it shows up as unpaid in the receivables
aging report.  Can I do better than this?

The accounting is ordinary, the customer owes you the money from the
original date.

The invoice, payment, bounce sequence is a record of events.  I think
this should show in your accounts, other people think it shouldn't,
dunno why, it is a reflection of the person that didn't pay, not you.

Ordinary solution?  Make a new invoice and let the person know you
expect it to be paid.

--
Wm

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Re: [GNC] How to handle bounced check

Jeff Abrahamson
In reply to this post by David Cousens
Please don't delete the transaction unless you really don't like good
accounting practices.  Always leave a trace of what you do and why.

Just select the original cheque payment, choose "Add reversing
transaction
<https://www.gnucash.org/docs/v3/C/gnucash-help/trans-reverse.html>",
modify the date and give it a slightly different number (I prepend "X"
to transaction numbers that are cancellations, any convention will do),
and add a description like "cheque returned for insufficient funds".

Separately, add an entry for the bank fee.  Refer to the transaction
number of the returned cheque (the X... in my world).

Jeff Abrahamson
http://p27.eu/jeff/
http://transport-nantes.com/


On 02/02/2019 06:06, David Cousens wrote:

> Mike
>
> Simnply delete the payment transaction. This will leave the invoice open and
> still awaiting payment.
>
> The other approach you could take if you want to maintain a full accounting
> trail would to be to create a reversing transaction for the payment, duly
> annotated. This will leave the original invoice in place but the reversing
> trannsaction won't be tied specifically to the invoice in the way the
> original payment was. You could then reissue a new invoice, adding the
> dishonour fee and any interest charges you specified in your original
> invoice terms and conditions.
>
> David Cousens
>
>
>
> -----
> David Cousens
> --
> Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
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Re: [GNC] How to handle bounced check

Deva -
In reply to this post by Mike Alexander
Mike,

In such cases, you could try creating a credit note - this will reverse both the invoice and the bank deposit and you have the audit trail.

Then create a new invoice (but this time, wait until the cheque gets credited to your bank). You can always pre-date invoices after the cheque has cleared.

FYI - credit note is on the same window as invoice creation - whenever you click on new invoice, the window that pops up has an option for you to specify whether it’s a new invoice or a new credit note (it defaults to new invoice).

Cheers.

On 02-Feb-2019, at 5:03 PM, <[hidden email]<mailto:[hidden email]>> <[hidden email]<mailto:[hidden email]>> wrote:

Date: Fri, 1 Feb 2019 23:24:22 -0500
From: Mike Alexander <[hidden email]<mailto:[hidden email]>>
To: gnucash-user <[hidden email]<mailto:[hidden email]>>
Subject: [GNC] How to handle bounced check
Message-ID: <[hidden email]<mailto:[hidden email]>>
Content-Type: text/plain; charset=utf-8

A few weeks ago I received a check in payment for an invoice I had sent to a customer.  I recorded the payment and deposited the check.  A couple of weeks later I got notice from my bank that the check had bounced.  My question is how to record this.  I want to ?unpay? the invoice and charge the amount back to the customer, but I can?t find a good way to do this.

I tried entering a transaction to debit Accounts Receivable and credit the bank account after which I manually added the split in A/R to the lot for that invoice.  This sort of worked, but the invoice is still marked paid in the customer report.  I can, however, select it in the ?Process Payment? dialog to pay it again and it shows up as unpaid in the receivables aging report.  Can I do better than this?

          Mike

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Re: [GNC] How to handle bounced check

Geert Janssens-4
In reply to this post by GnuCash - User mailing list
Op zaterdag 2 februari 2019 09:37:02 CET schreef Wm via gnucash-user:

> On 02/02/2019 04:24, Mike Alexander wrote:
> > A few weeks ago I received a check in payment for an invoice I had sent to
> > a customer.  I recorded the payment and deposited the check.  A couple of
> > weeks later I got notice from my bank that the check had bounced.  My
> > question is how to record this.  I want to “unpay” the invoice and charge
> > the amount back to the customer, but I can’t find a good way to do this.
> >
> > I tried entering a transaction to debit Accounts Receivable and credit the
> > bank account after which I manually added the split in A/R to the lot for
> > that invoice.
> my opinion is you are overthinking this
>
>  >This sort of worked, but the invoice is still marked paid in the
>
> customer report.  I can, however, select it in the “Process Payment”
> dialog to pay it again and it shows up as unpaid in the receivables
> aging report.  Can I do better than this?
>
> The accounting is ordinary, the customer owes you the money from the
> original date.
>
> The invoice, payment, bounce sequence is a record of events.  I think
> this should show in your accounts, other people think it shouldn't,
> dunno why, it is a reflection of the person that didn't pay, not you.
>
> Ordinary solution?  Make a new invoice and let the person know you
> expect it to be paid.

In double accounting that would create a mismatch between the document flow
and the money flow:
- you'd have two documents claiming you are to receive money
- you have entered one payment and one refund
Summing all of those together it would seem you should still receive two
payments.

You could balance this by writing an internal credit note to cater for the
bounced check and then write a new invoice (which you could send to the
customer to inform them of a bounced check).

Back to the original question: I think gnucash will try its best to keep you
from adding a reverse payment to an already paid invoice. So what you did via
manual lot manipulation is probably the closest you can get to that outcome.

There is however yet another way to see this: if the check bounced it didn't
really pay for the invoice to start with.

So you could decouple the payment from the invoice (the easiest way is by
unposting and reposting the invoice). Then presuming you want to keep record
of the fact that you received a check, you can keep the payment around and
directly credit it via the Process Payment dialog to indicate it bounced. That
is, you can select the payment only in that dialog and have gnucash "pay" for
that payment, which is to say gnucash would refund that payment.

Geert


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Re: [GNC] How to handle bounced check

Mike Alexander
> On Feb 4, 2019, at 4:32 AM, Geert Janssens <[hidden email]> wrote:
>
> Back to the original question: I think gnucash will try its best to keep you
> from adding a reverse payment to an already paid invoice. So what you did via
> manual lot manipulation is probably the closest you can get to that outcome.
>
> There is however yet another way to see this: if the check bounced it didn't
> really pay for the invoice to start with.
>
> So you could decouple the payment from the invoice (the easiest way is by
> unposting and reposting the invoice). Then presuming you want to keep record
> of the fact that you received a check, you can keep the payment around and
> directly credit it via the Process Payment dialog to indicate it bounced. That
> is, you can select the payment only in that dialog and have gnucash "pay" for
> that payment, which is to say gnucash would refund that payment.

Thanks for all the help, I learned a number of things.  What I ended up doing is use the “Add Reversing Transaction” command on the payment.  Somewhat to my surprise this did pretty much what I wanted to do.  It added a “reversed by” slot to the payment transaction and decoupled it from the invoice.  This left the invoice unpaid.  I created a new invoice for the late fee and used the customer’s replacement check to pay both the original invoice and this new one.  This seems to make the books reflect reality fairly well.  My main problem was that I had forgotten about the "Add Reversing Transaction” command so didn’t think to try it.

           Mike
 
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Re: [GNC] How to handle bounced check

Geert Janssens-4
Op dinsdag 5 februari 2019 00:18:47 CET schreef Mike Alexander:

> > On Feb 4, 2019, at 4:32 AM, Geert Janssens <[hidden email]>
> > wrote:
> >
> > Back to the original question: I think gnucash will try its best to keep
> > you from adding a reverse payment to an already paid invoice. So what you
> > did via manual lot manipulation is probably the closest you can get to
> > that outcome.
> >
> > There is however yet another way to see this: if the check bounced it
> > didn't really pay for the invoice to start with.
> >
> > So you could decouple the payment from the invoice (the easiest way is by
> > unposting and reposting the invoice). Then presuming you want to keep
> > record of the fact that you received a check, you can keep the payment
> > around and directly credit it via the Process Payment dialog to indicate
> > it bounced. That is, you can select the payment only in that dialog and
> > have gnucash "pay" for that payment, which is to say gnucash would refund
> > that payment.
>
> Thanks for all the help, I learned a number of things.  What I ended up
> doing is use the “Add Reversing Transaction” command on the payment.
> Somewhat to my surprise this did pretty much what I wanted to do.  It added
> a “reversed by” slot to the payment transaction and decoupled it from the
> invoice.  This left the invoice unpaid.
Interesting. I didn't know "Add Reversing Transaction" had any effect on the
business properties of a transaction.

Geert


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