A returned customer cheque should be linked to the original receipt and bank reversal before the customer balance is treated as settled. Establish whether money actually cleared and whether the ledger recorded a receipt in anticipation. A cheque being handed over is different from the company receiving usable funds.

Accounting records, calculator and glasses on a desk
Illustrative photograph by Cht Gsml.

Preserve the transaction chain

Keep the cheque reference, customer remittance, deposit record and bank’s returned-item advice. Identify the invoice or balance the cheque was intended to settle. Use secure copies and restricted references where the documents contain bank details.

Record dates separately: receipt, deposit, any provisional credit and return. Do not overwrite the original receipt date to hide the sequence. The accountant needs the chain to determine the proper reversal and outstanding balance.

Compare the bank and customer ledger

Check whether the accounting system created a receipt manually, through a bank feed or both. A reversal imported from the bank may need matching to an existing entry. Posting another negative sale without review can distort revenue instead of restoring the correct receivable.

Identify bank charges separately. A returned cheque and a fee for handling it are different components. Ask the accountant about their treatment rather than combining every movement into one unexplained customer adjustment.

Example: the customer offers a bank transfer

The cheque is returned and the customer sends a transfer confirmation. Keep the replacement instruction connected to the failed payment, but verify the actual incoming bank transaction. A screenshot of an instruction should not be used to mark the debt paid again prematurely.

Communicate the outstanding position

Give the authorised commercial owner the supported balance and payment references. Avoid making allegations about the customer’s intentions based solely on the return. Any dispute or recovery decision should follow the company’s agreed process.

Complete one supported settlement

When replacement funds are confirmed, reconcile them to the reopened balance and check that the original cheque receipt is no longer counted as successful payment. Retain bank advice, correspondence and approved entries together. IRAS requires records that explain transactions; this trail should make both the failure and eventual settlement understandable.

Related practical guidance

For the surrounding records and responsibilities, see bookkeeping basics, company records to keep, bookkeeping and accounting.

Official guidance: IRAS official guidance.

Help with your company records

For accounting, bookkeeping and related compliance support, contact Raffles Corporate Services at [email protected] or WhatsApp +65 8501 7133. Tell us which records or process need attention so we can discuss the relevant next steps.