Cheque Returned — Insufficient Funds (NSF)
Processing a returned cheque where the paying bank has rejected it due to insufficient funds in the drawer's account.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Customer Deposit Account (Reversal) | Liability (−) | 3,500.00 | - |
| Outward Clearing Suspense (Cleared) | Asset (−) | - | 3,500.00 |
💡 Accountant's Note
When a cheque is returned NSF, the provisional credit to the depositor's account is reversed. The bank charges a returned cheque fee to the depositor. In Jordan, the paying bank is required to report returned cheques to CBJ — serial returned cheque drawers face criminal penalties.
Practitioner & Systems Framework
💻 ERP Architecture
In Oracle FLEXCUBE, the JACH return notification triggers automatic reversal of the clearing credit. A returned cheque fee is applied per the schedule of charges. In SAP Banking, the return event is processed via the payment return workflow. The CBJ requires banks to submit monthly returned cheque statistics.
⚠️ Audit Flags
Auditors check that returned cheques are reversed within the JACH clearing cycle timeframe. Any interest or fees credited to the customer based on a provisional cheque credit (not yet cleared) must be reversed on the cheque return. CBJ returned cheque reporting accuracy is tested.
📄 Required Documentation
JACH return notification, account reversal confirmation, returned cheque fee billing, customer notification, and CBJ returned cheque report submission.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.