A customer's deposited check came back unpaid

Retrieve the bank's return notice and identify the check, payer, amount and original deposit. If the check was part of a batch, isolate it from the other receipts. Record the bank's stated reason and the date of the debit or adjustment. A reduced deposit total alone may not explain which customer's payment failed.

Do not assume that earlier funds availability established final collection. The OCC's check-hold guidance explains that funds can remain subject to return by the paying bank even after another bank has released them. Use the actual return evidence and account terms when assessing the position; avoid promising that every deposited check becomes irreversible after a fixed number of days.

Find the invoice or customer balance settled by the original receipt. Check whether the accounting or payment system already reversed that application. If not, have the accountant record the return so the appropriate amount becomes due again. Preserve the original receipt and return as linked events. Creating another sales invoice for the same goods can overstate revenue.

Record bank fees separately. Whether the customer owes an additional fee depends on the agreement and applicable rules, so obtain approval before adding one to the customer's balance. A bank charge incurred by the business does not automatically establish an enforceable customer charge.

Review the aged receivables report and customer statement after the correction. The collection team needs to see the original obligation, the unsuccessful payment and the amount still due. If the return affects a closed period or a previously reported bad-debt position, ask the accountant to assess the implications.

Contact the customer with the check reference and the bank's stated reason. Ask them to resolve the issue and agree an appropriate replacement method or timing. Determine with the bank whether redeposit is permitted and sensible for this item. Keep one person responsible for the next instruction so a redeposit and separate replacement do not both proceed unnoticed.

If the facts suggest an altered or fraudulent check, escalate under the company's incident process and contact the bank promptly. OCC guidance identifies check alteration and unfamiliar check activity as fraud risks. Preserve images and communications; do not send a refund or forward part of an uncertain deposit merely because a purported payer requests it.

Tell the account owner whether further goods or services require a credit decision. Any hold should follow the contract and company policy. Keep the payment investigation factual, especially where a genuine bank or customer error may explain the return.

Apply a replacement payment to the reopened obligation and retain the new reference. Confirm its actual bank status before closing the collection case. If the customer pays through a different channel, identify any separate fees or partial amount rather than clearing the full balance automatically.

Update the cash forecast when a material receipt is returned. The business may already have planned payments around the expected funds. Record the revised collection assumption and any management response without treating an unsupported promise as collected cash.

At the next reconciliation, verify that the original deposit, return debit, bank charges and replacement all appear once. Retain unresolved items with an owner and follow-up date. Repeated returns should inform the customer's future payment terms and credit review, based on the documented history and the commercial relationship.