QuickBooks Online®: Reversing a Duplicate ACH Payment
If you’re using QuickBooks Online®, at some point you may need to record the reversal of a duplicate ACH or EFT transaction. Want to know how?
Like many companies looking to eliminate check writing, minimize payment timelines or curb touchpoints during the pandemic, our client set up a new method to pay us via ACH. Obviously, they had a blip during setup because on the first payment attempt, they submitted the same ACH to the bank twice. Great for our cash flow, but not at all what we wanted to see them do!
The client created a reversal of the ACH and the amount in question was deducted from our bank account.
Tasked with keeping accurate track of the books and having transitioned from local to online versions of QuickBooks, I still run into a new ripple like this one on occasion; one that needs to be recorded in QuickBooks Online® so that there’s no question about what happened. All tidy.
Any time these one offs happen I dig deeper to figure out how to properly record the transaction. Querying the community Q&A forum often results in no perfect answer. Although I give kudos deserved that the gurus at QuickBooks usually describe the correct way to a handle scenario in a clear step-by-step way, their answer does not always solve my particular problem. The users’ experiences, while similar, are never quite the same.
Either the Q&A pre-dates the version I use, or the only answers that come up in a search apply to the local rather than the online version. It’s often close, but no cigar. How frustrating!
WHAT YOU SHOULD KNOW (IN CASE THIS APPLIES TO YOU)
- Despite having the option, we choose not have QuickBooks Online connect directly to our bank account for automated transaction downloads. This means that all bank transactions including client payments (or reversals) must be manually recorded in the bank register.
- Secure ACH payments are connected to the bank account via QuickBooks Online’s third-party service meliopayments.com, so while money lands at or leaves our bank, I must record payments or deposits manually in the bank account register. (See #1 above)
In this particular case, once our client’s reversal happened, I could have just voided the duplicate payment and the client account would have appeared as though the incident never happened.
I’m not a fan of this idea because if a question comes up at a later date, no one would easily be able to determine what happened. More importantly, the transactions don’t show up on a client statement and it leaves us with an inability to prove their account transactions are accurate.
Another problem would exist in the checking account register. It would not match our bank statement. Because we have two deposits, we need to show the reversal to correct one. But how?
- The two payments were recorded in the Client’s account.
- One payment was applied to the Open Invoice they intended to pay, which shows up on the bank account register as a payment to Accounts Receivable with the Client as the payee.
- One payment was left as an open Credit. Again, as an Accounts Receivable transaction with the Client as the payee.
WHERE MY THINKING WAS WRONG (and yours could be too)
I believed that I should reverse one of the payments on the Client’s account.
I Googled how to reverse an ACH payment in QuickBooks, but it returned a piece about how to reverse an ACH if you have a QuickBooks Merchant account. This is NOT what I needed because (a) the client had already reversed the ACH and (b) doing so would have had our bank return the money to the client resulting in a double reversal!
But the menu options can’t solve the problem.
You cannot create an Invoice with a negative dollar amount. A Payment cannot be a negative number, a Credit Memo cannot be a positive number (to counter the credit), and none of the other options are relevant.
The answer to reversal is on the bank account side.
Aha! A Refund!
HOW I FINALLY FIXED IT
QuickBooks Online Tip: Create an Expense in the Bank Account register!
- The Payee is your Client.
- Enter a clear description of the reason for the transaction.
- Enter the Payment Amount.
- Select Accounts Receivable in the drop down.
This ties the expense specifically to your client’s account. The Client’s account shows the entry as an expense and unapplied payment.
Apply the payment to the duplicate ACH. The expense will also show up on the client’s monthly statement to offset the duplication. This should be easy enough for the client to understand and for you and anyone who looks at it later to track it.
In retrospect, the answer seems so obvious. Insert Happy Dance here.
Hope this Quickbooks Online® tip helps you!
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