Record a Matter’s NSF (Bounced) Operating Bank Deposit

Most matter-related deposits to your operating account will fall into two categories: invoice payments and operating retainers. For accounting and recordkeeping purposes, you can record when an operating account deposit fails to clear, or bounces, due to insufficient funds (NSF).

Record a Matter’s NSF Operating Deposit

Step 1: Modify the Original Deposit Transaction Memo Line

To modify the original deposit transaction line memo:

1. From the left navigation panel, click Banking.
2. On the Bank screen, double-click the appropriate operating bank.
3. Locate the deposit in question. You can use search filters to expedite your search.
4. Select the deposit, click on the three dots at the end of the row and from the drop-down, click Edit.
5. On the Edit Operating Transaction screen, edit the Memo fields to indicate the check bounced or was rejected for NSF, referencing the reversal date.
6. Make note of the Account to which this transaction was posted.
7. In the upper right corner, click Save.
   The system saves your memo changes.

Step 2: Unlink the Deposit from the Invoice

Note: If you are reversing an operating retainer which is unlinked to an invoice, skip to Step 3: Enter Credit Memo for Reversal.

To unlink the deposit from the invoice:

1. From the left navigation panel, click Matters.
2. On the Matters screen, double-click the matter, or single-click it and click on the three dots at the end of the row and then from the drop-down, click View.
3. From the tabs atop the Matter Summary section, click Billing.
4. From the tabs atop the Billing screen, click Invoice.
5. On the Invoice screen, locate the invoice in question. If you need to view paid and unpaid invoices, you can use search filters to expedite your search.
6. To the right of the invoice, click the three dots and from the drop-down, click View Details.
7. On the Invoice Details screen, note the payment dates and amounts recorded for the invoice.
8. In the upper right corner, click x(Close).
   The screen closes, returning you to the Invoice screen.
9. To the right of the invoice, click the three dots and from the drop-down, click Unfinalize Invoice.
   
   The Confirmation message reads: Are you sure you want to unfinal the Invoice.
   
   
10. Click Yes.
    The system returns you to the Invoice screen with your highlighted invoice.
11. To the right of the invoice, click the three dots and from the drop-down, click Edit.
    The Warning message reads: Payments have been applied to this invoice.CAUTION: When you regenerate the invoice after your edits the system will automatically unlink ALL payments from the invoice which impacts the general ledger and financial reports as of the original invoice payment date(s).Do you still want to edit the invoice?
12. Click Yes.
    The system unlinks the payment from the invoice and moves the original payment to the operating retainer.

Note: If you receive an error with this step, you must first enable operating retainers under Setup > Firm Preferences.

If your firm applied multiple payments to the invoice, you can reapply them using the toolbar’s Invoice Payment Using > Existing Operating Retainers function.
We recommend you apply these funds individually as your firm received them, excluding the payment that bounced. Use the original payment date and amount. Once complete, the invoice will have a remaining balance.

Step 3: Enter a Credit Memo for the Reversal

Now that you have moved the funds from the deposit to the operating retainer, you must account for the bank’s reversal of the deposit and withdrawal of the funds from your account. To do so, you must issue a credit memo.

When issuing the credit memo:

• The system automatically populates the Amount field with the total operating retainer. If your operating retainer includes funds in addition to the bounced deposit, adjust the Amount field as needed.
• In the Memo field, enter Reversal due to NSF. Be sure to include the original check number and deposit date.

Once your credit memo is complete:

• Client balances are correct
• Invoices are unpaid
• The transaction record is accurate in all application locations.