QuickBooks Desktop Chargeback Reconciliation
How to reconcile chargebacks in QuickBooks Desktop using the built-in Record Bounced Check function.
When a chargeback occurs on a payment that has already been synced and deposited, QuickBooks Desktop requires a manual reconciliation process. Unlike QuickBooks Online, where Alternative Payments manages this automatically, QuickBooks Desktop partners need to update their books directly within QuickBooks Desktop.
The Previous Manual Process
Before the streamlined method described below, the recommended approach involved three separate steps:
Unlink the payment from the invoice — remove the association between the received payment and the original invoice in QuickBooks Desktop.
Create a journal entry — debit the Accounts Receivable account and credit the Chargebacks account to record the chargeback amount.
Link the payment to the journal entry — re-associate the payment record with the journal entry created in step 2.
While this approach works, it is time-consuming and prone to error. The method below achieves the same result in fewer steps using a built-in QuickBooks Desktop feature.
Recommended Process: Record Bounced Check
QuickBooks Desktop includes a built-in Record Bounced Check function that provides a cleaner, fewer-step alternative for recording chargebacks. The steps below walk you through the full workflow.
Step 1: Locate the Original Payment
In QuickBooks Desktop, open the Customer Center (from the top menu, go to Customers > Customer Center).
Find and select the customer associated with the chargeback.
In the customer's transaction list, locate the original payment that was received and is now being disputed.
Double-click the payment to open it.
Step 2: Use the Record Bounced Check Function
With the payment record open, click the Record Bounced Check button in the toolbar at the top of the payment window.
A Manage Bounced Check dialog will appear. Fill in the following fields:
Bank Charge Amount: Enter any bank fee associated with the chargeback, if applicable. If there is no fee, enter
0.00.Date: Confirm or update the date of the chargeback.
Expense Account: Select the account you use to track chargebacks (for example, your Chargebacks account).
Class: Assign a class if your company uses class tracking; otherwise, leave blank.
Click Next to proceed.
Step 3: Review and Confirm the Resulting Transactions
QuickBooks Desktop will automatically create the following records on your behalf:
A debit memo (or invoice) that re-opens the original invoice for the chargeback amount, restoring the balance owed by the customer.
A journal entry that debits Accounts Receivable and credits the expense account you selected (your Chargebacks account), recording the chargeback against your books.
Review the summary shown in the dialog to confirm the amounts are correct, then click Done (or Finish) to save the transactions.
Step 4: Verify the Customer's Balance
After completing the steps above:
Return to the Customer Center and select the affected customer.
Confirm that the original invoice now shows an open balance equal to the chargeback amount.
Confirm that the chargeback is reflected in your Chargebacks account register (Lists > Chart of Accounts > open the Chargebacks account).
The customer's account is now accurately updated to reflect the disputed payment, and your books are balanced without the need for manual journal entries.
Summary: Old Process vs. Record Bounced Check
Steps required
3 (unlink payment, create journal entry, re-link payment)
2 (open payment, use built-in function)
Journal entry
Created manually
Created automatically by QuickBooks Desktop
Risk of error
Higher — manual debit/credit entry
Lower — QuickBooks Desktop calculates entries
Accounts updated
Accounts Receivable + Chargebacks
Accounts Receivable + selected expense account
Chargeback After Payout: Automatic Two-Step Reconciliation
When a chargeback or payment failure occurs after a payout has already been issued, the standard Record Bounced Check workflow above does not apply. At that point, the payout deposit in QuickBooks Desktop reflects money that has genuinely moved — deleting the payment or the deposit record would break your bank reconciliation. At the same time, the invoice cannot remain marked as paid if the funds have been reversed.
Alternative Payments handles this scenario automatically with a guaranteed two-step process.
Step 1 — Unapply the Payment from the Invoice
Alternative Payments unapplies the payment from the invoice in QuickBooks Desktop. This reopens the invoice so it can be paid again. Critically, both the payment record and the deposit record remain intact in QuickBooks Desktop, so your bank reconciliation is not disturbed.
Step 2 — Compensating Journal Entry
Once the unapply has successfully synced into QuickBooks Desktop, Alternative Payments pushes a compensating journal entry. The ordering is guaranteed — the journal entry will not fire until the unapply has landed. The journal entry is structured as follows:
Debit — the account the invoice sits in (typically Accounts Receivable)
Credit — the Refunds account configured in your Alternative Payments integration settings
Net Result
After both steps complete:
The invoice is open again and available for re-payment.
The customer's balance is correct.
Your bank reconciliation is untouched — the original payment and deposit records remain in place.
The chargeback amount lands in the account you configured for it in your integration settings.
Monitoring Progress in the Integration Log
You can track both steps in the Integration Log within your Alternative Payments partner dashboard. Each step appears with a distinct label:
Payment Chargeback 1/2 (unapply)
The payment has been unapplied from the invoice in QuickBooks Desktop.
Payment Chargeback 2/2 (journal entry)
The compensating journal entry has been pushed to QuickBooks Desktop.
Debugging tip: If you see a Payment Chargeback 1/2 (unapply) entry with no corresponding Payment Chargeback 2/2 (journal entry), the unapply has landed but the journal entry has not yet synced. The customer's balance will be short by the chargeback amount until the journal entry completes. Allow a full sync cycle and check again; if the 2/2 entry does not appear, contact our Customer Experience team.
Refunds After Payout
The same two-step workflow applies when a partner issues a refund after payout — not just chargebacks. In both cases, Alternative Payments unapplies the payment first, then pushes the compensating journal entry, and the same 1/2 / 2/2 log labels appear in the Integration Log.
If you need further assistance, don't hesitate to reach out to our Customer Experience team at customersuccess@alternativepayments.io or by sending us a message via the Live Chat within your partner dashboard.
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