Sep 13

How to Book Returned Checks

From the American Institute of Professional Bookkeepers:

To avoid mispostings—and liability for another employee’s misdeeds—follow these simple steps:

Returned checks. When the bank notifies you that it is returning a patient’s check for NSF (not sufficient funds), debit the patient’s account immediately—even if you plan to redeposit the check the same day. For good internal controls, instruct your bank to address all returned checks to someone other than you—possibly the physician owner or a senior manager. This can protect you if an employee tries to use fictitious checks to cover temporary shortages.

Postdated checks. If a patient gives you postdated checks, treat them as a note receivable.  In other words, debit it to Notes Receivable, not to Cash. On the date written on the check, deposit it to your practice’s account, debiting Cash and crediting Notes Receivable.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →