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If you receive a customer payment by cheque that is dishonoured by your bank (also called a bounced cheque), you can reverse the payment. After you reverse it, the invoice will show as outstanding. If it's unlikely that you'll receive a payment, you'll also need to account for a bad debt.

Before you reverse a transaction, you need to set your security preferences to allow transactions to be reversed (Setup menu > Preferences > Security tab > Transactions CAN'T be Changed; They Must be Reversed).

If the payment was included in a bank deposit, you'll also need to update the deposit so you can reconcile it later.

To reverse a payment

1. Open the invoice against which the payment was made.
2. Click History (next to the Applied to Date field).
3. Open the payment transaction.

4. Go to the Edit menu and choose Reverse Payment.

   UI Text Box
   type note
   Reverse option greyed-out?  Your user role needs to be set up with permission reverse transactions. If you need to regularly reverse transactions, ask your administrator to add this permission to your user role.

5. Check the transaction details then click Record.

6. if required, account for the bounced cheque in your bank deposit.

To update the bank deposit (if required)

1. Reverse the payment as described above.
2. Open the Prepare Bank Deposit window.
3. Select the reversed payment (displayed as a negative value).
4. Click Record.

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