Recording an NSF Check from a Customer in Sage 50

Last updated: March 7th, 2024

Recording an NSF Check from a Customer in Sage 50

A Non-Sufficient Funds (NSF) check, also known as a bounced check, is a check that is returned by the bank due to insufficient funds in the customer's account. When a customer's check bounces, it is important to record the NSF check in your accounting system to maintain accurate financial records. In this article, we will guide you through the process of recording an NSF check from a customer in Sage 50.

Understanding NSF Checks

An NSF check occurs when a customer writes a check for an amount that exceeds the available balance in their bank account. When you deposit the check, the bank will return it unpaid, and you will be charged an NSF fee by your bank. This fee is typically passed on to the customer, along with any additional charges you may impose for the inconvenience.

Steps to Record an NSF Check in Sage 50

Follow these step-by-step instructions to record an NSF check from a customer in Sage 50:

  1. Open the Customer Record: In Sage 50, navigate to the Customers & Sales module and open the customer record for the individual who issued the NSF check.

  2. Access the Receipts Window: Click on the "Receipts" tab within the customer record to access the receipts window.

  3. Locate the Original Payment: Find the original payment entry for the check that was returned as NSF. This entry should be listed as a receipt in the customer's account.

  4. Reverse the Original Payment: Double-click on the original payment entry to open it. In the "Reverse" field, select "Yes" to reverse the payment. This will remove the payment from the customer's account and create a new reversing entry.

  5. Enter NSF Check Details: In the reversing entry, update the following fields:

    • Date: Enter the date when the check was returned as NSF.
    • Ref: Enter "NSF" or a similar reference to identify the entry as an NSF check.
    • Bank Account: Select the bank account where the check was originally deposited.
    • Amount: Verify that the amount matches the original check amount.
  6. Save the Reversing Entry: Click "Save" to record the reversing entry in Sage 50.

  7. Create an Invoice for NSF Fees: If you incur any NSF fees from your bank or wish to charge the customer for the bounced check, create a new invoice for the customer. Include the NSF fee amount and any additional charges you may impose.

  8. Apply the Invoice to the Customer's Account: Save the invoice and apply it to the customer's account. This will update the customer's balance to reflect the additional charges.

Best Practices for Handling NSF Checks

To minimize the occurrence of NSF checks and handle them efficiently, consider the following best practices:

  • Establish a clear policy regarding NSF checks and communicate it to your customers.
  • Require customers to pay any NSF fees and additional charges incurred due to the bounced check.
  • Follow up with customers promptly to arrange alternative payment methods and ensure timely collection of outstanding balances.
  • Consider implementing a check verification process or accepting alternative payment methods to reduce the risk of receiving NSF checks.


Recording an NSF check from a customer in Sage 50 is a straightforward process that involves reversing the original payment entry and creating an invoice for any associated fees. By maintaining accurate records of NSF checks and following best practices for handling them, you can ensure the integrity of your financial data and minimize the impact of bounced checks on your business.

Frequently Asked Questions

Q: What happens if I receive an NSF check from a customer?
A: When you receive an NSF check, the bank will return the check unpaid, and you will be charged an NSF fee. You should record the NSF check in your accounting system, reverse the original payment entry, and create an invoice for any associated fees or charges.

Q: Can I charge my customer for the NSF fee?
A: Yes, it is common practice to pass on the NSF fee to the customer who issued the bounced check. You can create an invoice for the NSF fee and any additional charges you may impose for the inconvenience caused.

Q: How can I prevent receiving NSF checks from customers?
A: To minimize the risk of receiving NSF checks, you can establish a clear policy regarding bounced checks, implement a check verification process, or encourage customers to use alternative payment methods such as electronic transfers or credit cards.

Q: What should I do if a customer repeatedly issues NSF checks?
A: If a customer repeatedly issues NSF checks, you may want to reconsider your business relationship with them. Communicate your concerns to the customer, and if the issue persists, consider implementing stricter payment terms or refusing to accept checks from that customer in the future.

Q: Is an NSF check considered cash in accounting?
A: No, an NSF check is not considered cash in accounting. When a check is returned as NSF, it means that the payment was not successfully processed, and the funds were not received. The NSF check should be recorded as a receivable until the payment is successfully collected from the customer. Protection Status


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