There are two scenarios to process a NSF (non-sufficient funds check) for proper accounting:
  1. If the check was actually deposited, then the money withdrawn when the bank realized the check was bad (showing a deposit and subsequent withdrawal from your account):
    1. If the check was allocated to an invoice, remove the check allocation following these steps: Deleting an Allocation.  Otherwise proceed to step 2.
    2. REFUND the check payment invoice following these steps: How to Issue a Refund
  2. If the check was never deposited to your bank, and it was as if you never received the money (no deposits or withdrawals shown on your account):
    1. If the check was allocated to an invoice, remove the check allocation following these steps: Deleting an Allocation.  Otherwise proceed to step 2.
    2. VOID the check payment invoice  following these steps: How to Void an Entire Invoice