Record a returned payment (a bounced cheque or recalled e-Transfer)

Sometimes a payment you already recorded never actually clears. A cheque bounces, an e-Transfer is recalled, or a pre-authorized debit comes back from the bank. Mark returned is how you record that, and it is different from a refund.

Returned is not a refund

Use the right one, because they mean opposite things on your books and on the tenant's record.

• Refund means you received the money and chose to send some of it back.
• Mark returned means the money never arrived at all.

Recording a bounced cheque as a refund makes your books say cash moved twice for a dollar that never came in, leaves the tenant holding a rent receipt for money that bounced, and stops the follow-up sequence that would otherwise chase the payment.

How to record one

You can do it from either place:

• On the lease. Open the lease, go to the Money tab, find the payment, and choose Mark returned.
• From the Payments page. Open Money, then Payments, find the payment, and choose Mark returned.

Then pick the reason (not sufficient funds, stop payment, account closed, invalid account details, transfer recalled, or another reason) and add a note if the bank gave you a return code.

What happens next

• The payment is marked Returned. The record stays, with your name and the date on it. Nothing is deleted.
• The money comes off your books, so the rent is owed again and the tenant's balance goes back up by exactly what bounced.
• The rent receipt for that payment stops being available, because it is no longer proof of payment.
• The tenant is told their payment was returned and that their balance has changed, unless you turn the notice off.
• Your normal payment follow-up starts again on that month, the same as any other unpaid rent.

Charging a returned payment fee

Most provinces let you charge an administration fee. Tick Charge a returned payment fee and the amount is capped for the property's province. Ontario allows up to $20. Quebec does not allow a fee at all, so the option does not appear for a Quebec property.

The fee lands on the tenant's balance like any other charge, so it shows up in arrears and on their statement, but it is booked as fee income rather than rent, so it does not inflate the rental income on your tax summary. This is tooling, not legal advice. Check your tenancy agreement and your province's rules before charging one.

Your bank's own returned-item charge is separate. If your tenancy agreement lets you pass it on, add it as an ordinary charge with the bank's fee named in the description.

When you cannot mark a payment returned

• It is already recorded as returned. A payment can only bounce once.
• There is a refund against it. Reverse the refund first, then record the return.
• It is a card payment. A card payment is disputed through the card network as a chargeback, and a chargeback can be contested and won, so we do not reverse your books on it. Contact your payment provider.
• It was paid from a holding deposit. Reverse the holding deposit instead.
• The accounting period is closed. Re-open the period first, then record the return.

Who can do it

An owner or an approver. Reversing money that was already recorded is the same level of authority as voiding a posted charge, so a team member who needs sign-off to record a payment cannot undo one on their own.