2035474 - How to Reverse an Incoming Check Returned By the Bank

You have processed an incoming check from your customer, however you get a bank notification that returns the check due to insufficient funds.

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1. Go to the Liquidity Management work center.
2. Go to the Payment Monitor view.
3. Select a group of incoming checks and assign them to a Check Deposit in order to deposit them to your bank.
4. Go to Payment Management work center.
5. Go to Check Deposits subview.
6. Select the relevant check deposit and release it. The incoming checks should now be In Transfer.

You are now awaiting the bank notification to process your bank statement.

The Bank entity processed your checks, however one of them was returned due to insufficient funds. Reason being that the writer has insufficient funds to afford the check, hence it gets bounced.

Technically in the system, it is not possible to unassign or change assignment of a particular check once the deposit is released. The only way to achieve this is either wait for the Bank Statement Notification or a Bank Statement to confirm the check bounce, or if you cannot wait, then the deposit has to be reversed and all other checks need to be reassigned back. However, doing this may lead to audit problems as you will lose account of the bounced check and the corresponding document entry.

In order to process the bounced check, you should deal with it as an outgoing return in the bank statement through the following steps.

1. Wait for the bank notification that would contain the details of both the confirmed and the bounced check.
2. Go to Liquidity Management work center.
3. Go to Bank Statements view.
4. Create a new Bank Statement for the relevant company and bank account.
5. Calculate the Closing Balance only for the confirmed check amount.
6. Go to step 2-Select Items and select the released deposit.
7. Go to step 3-Create and Edit Items. You will see a row for the selected check deposit. Note that this regards a credit amount.
8. Add a new row for the bounced check by selecting the Payment Method as Outgoing Return of an Incoming Payment. Specify the check amount as a debit amount.
9. Once the bank statement is consistent, post it.
10. Go to back to the Bank Statement view.
11. Select the row related to the recently posted bank statement.
12. Click the Required hyperlink in the Postprocessing column, in order to open the payment allocation. 
13. On the Payment Confirmation/Returns tab, select the bounced check and click the downward arrow to allocate the amount. Note the Payment Returned box flagged.
14. Post the payment allocation.

The payment allocation gets posted and the bounced check linked to it becomes Returned.

Incoming Check, Check Deposit, Bounced Check, Returned Check, Bank, canceled , KBA , AP-PAY , Payment Processing , SRD-FIN-MOP , Payment Management , How To