How to Record a Returned Wire Transfer in QuickBooks Desktop & Online? 

Wire transfers are not just confined to moments like finalizing a home purchase or sending money abroad to loved ones; businesses can also benefit from sending and receiving wire transfers, particularly for urgent fund transfers, where speed is paramount.

What is a Wire Transfer?

A Wire Transfer is a quick way to send money electronically between a predetermined set of intermediaries, without a physical exchange of cash. These intermediaries can be traditional banks (i.e., Bank of America) — also known as bank wire transfers — or non-bank providers (like Western Union).

They ask for specific information such as the names and bank account numbers of both the sender and the recipient and the Amount to be transferred. Most wire transfers can take up to two business days to process, depending on the type of wire transfer. They’re generally considered to be a secure way of wiring money between bank accounts as long as you know the correct information of other parties.

There are two types of wire transfers:

Domestic Wire Transfer

A domestic wire transfer refers to any electronic payment made between two banks or financial institutions within the borders of a single country. These transactions are processed and completed on the same day they are initiated.

International Wire Transfer

An international wire transfer involves initiating a payment in one country and settling it in another. Even if the recipient holds an account at the same bank as the sender but in a different country, an international wire transfer is necessary. It takes at least two business days to complete the transfer.

Return Wire Transfer

Return wire transfer or reverse wire transfer occurs when a wire transfer is not accepted by the recipient’s bank and is sent back to the sender’s account. This can happen for various reasons, such as incorrect account details, insufficient funds in the recipient’s account, or the recipient’s bank rejecting the transfer due to compliance issues.

Reverse transfers normally take 2-3 business days to be credited to your bank account. Some transaction gateways that enable remittance transfer provide a 30-minute window to reverse transfer your payments.

Recording a reverse wire transfer in QuickBooks will impact accounts payables, receivables, and the vendor account that reversed the payment.

How does Wire Transfer work?

For a wire transfer, funds move between banks or financial institutions through wire networks like the Federal Reserve Wire Network in the U.S. (also known as Fedwire). When you start a wire transfer, the sender provides the details such as the recipient’s name, bank name, account number, and routing number. Once the sender’s bank receives the necessary details, they initiate the transfer by deducting the Amount from the sender’s account and sending payment instructions to the recipient’s bank.

The recipient’s bank deposits its reserve funds into the recipient’s account upon receiving the payment instructions. The actual settlement of funds between banks occurs after the recipient’s bank confirms the availability of funds.

Record the Returned Wire Transfer as a Deposit in QuickBooks Desktop

You can record the returned wire as a deposit in QuickBooks desktop. To record a returned wire transfer in QuickBooks Desktop, go to “Make Deposit,” select the bank account, enter the date, vendor, and amount, add bank charges as a negative item, and save.

Below are the points you need to follow:

• Go for Make Deposit: Click Banking, located at the top. Select Make Deposit.
• Mention a bank account: Choose the bank account from the Deposit To drop down list.
• Enter the Date: Select the Date.
• Select the Vendor: In the first line, choose the vendor from the Received from drop-down menu.
• Type the Amount: Enter the Amount (This will be the actual Amount of the wire transfer).
• Add the bank charges as a negative item: In the second line, enter the bank charges as a negative item.
• Finishing up: Click Save and Close.

Once done, the actual Amount credited will be recorded in the bank account.

Create a Bank Deposit to Record the Wire Transfer when less fees returned

You can create a bank deposit to record the wire transfer on QuickBooks desktop when the less fee is returned. To record a wire transfer with fees in QuickBooks Desktop, go to “Make Deposits,” select the account, enter the deposit date, add an Other Current Liability account, input the amount, include the bank fee as a negative expense, and save the deposit.

Following the step-by-step information below:

1. Go for Make Deposits: Navigate to the Banking menu at the top and then choose Make Deposits.
2. Select the Account: Click the account where you want to deposit the Amount under the Deposit to the field.
3. Enter the Deposit date: Update the deposit date.
4. Add an Other Current Liability account: On the From Account column, select Add New to add an Other Current Liability account.
5. Choose Other Account Types: Hit the Other Account Types radio tab and then choose Other Current Liability.
6. Mention the Account Name: Press Continue and enter the Account Name, then click Save & Close.
7. Input the Amount and add the bank fee: Type the Amount and add the bank fee to another line item. Then, choose a new expense line item under the From Account column.
8. Select Add New & Expense: Click Add New, select Expense, and then hit the Continue tab.
9. Write down the Expense Name: Enter the name of the Expense (Bank fee) and press Save & Close.
10. Type a negative amount for the bank fee: In the Amount field, write down a negative amount for the bank fee.
11. Finishing up: Press the Save & Close buttons.

Record a Wire Transfer in QuickBooks Online

How you record a wire transfer depends on the purpose of the wire transfer. You can record it as an expense using the Cash Expense feature or as a deposit using the Bank Deposit feature.

Let’s have a look:

Part 1: Record a Wire Transfer as an Expense

If the money will be transferred out of your account, follow the below-listed steps:

Step 1: Select Expense

You need to create a new account, “Expense,” under the Suppliers category.

Click + New and then choose Expense under Suppliers.

Step 2: Mention a Supplier or Place of Purchase

Every transaction in double-entry accounting has two parties. In this case, the money returned is related to the vendor (supplier) to whom the transaction is mapped.

In the Payee field, specify a supplier or place of purchase (Optional).

Step 3: Name the Bank Account the Wire was Transferred from

You need to enter the name of the bank account from which the wire has been transferred. This ensures clarity and accuracy in determining the source of funds which makes tracking and record-keeping purposes in financial transactions easy.

Use the drop-down list under the Payment account field to name the bank account the wire was transferred from.

Step 4: Type the Date of Purchase

Entering the specific date the purchase was made is important for record-keeping, warranty claims, and tracking expenses. Ensure that the format is consistent with any required guidelines, such as MM/DD/YYYY or DD/MM/YYYY, to avoid any confusion.

Enter the Date of purchase in the Payment date field.

Step 5: Pick the Payment Method

Choosing a payment method involves selecting how you will complete your transaction, whether through credit/debit cards, digital wallets, bank transfers, or cash.

Choose the Payment method from the dropdown list.

Step 6: Enter Wire Trans or WT

Type Wire Trans or WT in the Ref no. field.

Step 7: Write Down the Expense info and Accounts Payable

Under the Category details section, enter the expense info. Then, select the expense account you use to track expense transactions in the Category drop-down menu or input Accounts Payable if the transfer was for a bill. 

Step 8: Add the Amount of Purchase

Type in the Amount of the purchase.

Step 9: Finishing up

Press the Save and Close or Save and New tabs.

Part 2: Record a Wire Transfer as a Deposit

If the money will be transferred into your account, adhere to the steps presented below:

Step 1: Select Bank Deposit

Click + New and then choose Bank Deposit under Other. 

Step 2: Add the bank account the wire was transferred to

Select the bank account the wire was transferred to from the Account dropdown menu. 

Step 3: Input the Date of when the wire received

Enter the Date the wire was received. 

Step 4: Mention who the wire was received from

On the first line, mention who the wire was Received From (Optional). 

Step 5: Identify the income Account and enter Accounts Receivable

Determine the income account related to the transfer or input Accounts Receivable (A/R) and if the transfer is intended to pay an invoice.

Step 6:  Enter Wire Trans or WT

Type Wire Trans or WT in the Payment method. You can add this payment method if it does not display in the list.

Step 7: Check the Transferred Amount

Specify the transferred Amount.

Step 8: Type the Expense Account

On the next line, if any fees were deducted from the actual Deposit, enter the expense account that tracks wire or bank fees, and the total Amount of the fee is entered as a (-) negative amount.

Step 9: Verify the Balance of the Deposit

Ensure that the balance of the Deposit matches the actual Amount deposited to the account.

Step 10: Finishing up

Press the Save and Close or Save and New tabs.

Record the Reversed Wire Transfer in QuickBooks Online

If the reversed Amount is less than the original wire transfer amount, you are required to do the following:

First we display the initial bill in the system for 1500.00 and the previous payment for 1000.00 This leaves you with an outstanding balance of $500 on the bill. 

1. Pull up the vendor that had the bill, in our example we used your screen name and found the Expense that was pushed through the bank feed but not matched as a bill payment. 
2. Navigate to the Expense (wire) of $500.00, open it, and add the bill from the tray to turn that Expense into a bill payment. This will make the bill paid in full.
3. Now, to document the returned wire transfer:
4. Scroll the bank feed screen.
5. Locate the deposit transaction for $455 (which was the $500 -$45 fee).
6. Click Add to open it, and then press the split button on the screen.
7. Add the vendor name FIRST, and then the account accounts payable for the first line.
8. Type the Amount of $500.
9. Drop down a line and add the Expense for the bank fee to bank service charges and a minus -$45.00 line item. This makes the transaction net at $455.00
10. When you’re ready, save all the steps above; it will raise the balance for that vendor backup by the $500 that was returned.
11. Go back to the vendor and pay the remaining balance of $500.00. against the Accounts Payable Balance.

Record a Returned Payment as an Expense

You can either record returned customer payments using an expense or a journal entry.

If you choose to record a customer’s returned payments as an expense, follow these steps:

1. Enter the bounced check/returned payment as an expense.
2. Unapply the bounced check/returned payment from the original invoice.
3. Create an item for fees (wire fee charged) from your bank.
4. Enter the service fee the bank charged you.
5. Create an invoice for the bounced check fees to send to your customer.
6. Send a statement to your customer.

Create an Expense Account to record the Deducted fee

Step 1: Go for the Chart of Accounts

Move to Accounting on the left panel and then choose a Chart of Accounts.

Step 2: Select New and the Account Type

Hit the New tab and then select the Account Type dropdown menu.

Step 3: Add Expenses and enter Bank Fees

Select Expenses and then type Bank Fees under Name.

Step 4: Finishing up

Press Save and Close.

Create a Product/Service item

Once done, it’s time to create a Product/Service item.

Adhere to the steps listed below:

Step 1: Opt for Products & Services

Click on the Gear Icon at the top and then select Products and Services.

Step 2: Select New & Service

Press New on the right-hand side and choose Service.

Step 3: Name as Bank Fees

Name it as Bank Fees.

Step 4: Add the Expense Account

Select the Expense account you just created under Income Account.

Step 5: Finishing up

Hit the Save tab.

Enter a Refunded Wire Transfer

Create a Bank Deposit and post the Amount to your Accounts Payable. It will raise the balance for that vendor backup by the Amount that was returned.

Here are the steps for the same:

Step 1: Go for Bank Deposit

Click + New and then select Bank Deposit.

Step 2: Add the Correct bank account

Choose the correct bank account.

Step 3: Type the Vendor’s name

Enter the vendor’s name under the Add funds to this deposit table.

Step 4: Select Accounts Payable

Make sure to choose Accounts Payable in the Account section.

Step 5: Enter all the necessary details

Fill in all the necessary fields.

Step 6: Input the Amount

Type the Amount under the Amount section.

Step 7: Finishing up

Press the Save and Close buttons.

Note: Once done, it will show that the vendor still owes the Amount.

Bottom Line!

When you move money from one account to another through wire transfer, there might be chances to get your money, and this is where you need to record a returned wire transfer in QuickBooks. Wire transfer is a swift, efficient, and preferred choice for businesses, consumers, and financial institutions, requiring convenient and secure money transfers. Here, only the authorized parties can access sensitive information while the funds are being transferred.

Disclaimer: The information outlined above for “How to Record a Returned Wire Transfer in QuickBooks Desktop & Online? ” is applicable to all supported versions, including QuickBooks Desktop Pro, Premier, Accountant, and Enterprise. It is designed to work with operating systems such as Windows 7, 10, and 11, as well as macOS.