What is NSF?
NSF stands for “non-sufficient funds.” An NSF check is a returned check. This means the bank has refused to honor the check because there isn’t enough money in the account to cover it. These are often also simply called bad or bounced checks.
What happens when an NSF check is written?
When an NSF check is written, a number of negative consequences may follow. The financial institution of the person writing the check makes one of two choices:
Allowing the check
The bank of the check writer may also decide to let the check push through. This, however, would put the check writer’s account into an overdrawn status. For some banks, this means they will charge the account holder fees simply for overdrawing, but may continue to charge for each day or certain amount that they are over. It can end up burning quite a hole in the wallet.
Refusing the check
For the check writer, the bank may refuse to honor the check. The bank will not allow the funds to process, and the writer will likely be charged a fee just for writing the check.
If the bank chooses not to honor the check, they will return the check to the depositor (the person cashing the check or depositing it into their account as a payment). When this happens, the check will not clear, and the depositor’s bank will also tack on a “Deposit Item Returned” fee (DIR). Potentially, the returned item could sink the depositor’s account into overdrawn status, also initiating an overdraft fee.
Banks consider both the depositors and the check writers as being responsible for the NSF check – and they have no problem making it a very expensive mistake.
How do you protect your business from NSF checks?
NSF checks can be very frustrating and costly to businesses that need to process payments. Some decide not to accept checks at all as a last resort, but this is choice limits the payment options of your customers.
For many businesses, it’s a wise decision to accept paper and eChecks, or electronic checks. This allows customers the flexibility of selecting a payment option that works for them – and many people just want to simply have a payment come right out of their checking account.
But how can business handle NSF checks? It’s wise to have a plan set into place so that when NSF checks appear, it isn’t a complete disaster. NSF re-presentment is your best option, as it allows you to recover the funds for each check.
What is NSF re-presentment?
When an NSF check is written, re-presentment will simply “re-present” the check to the writer’s bank at a later date. This way, the check has another shot to clear. Forte’s NSF re-presentment option lets you select the date you wish to re-present the check, which enables you to choose a time when you think there is a stronger likelihood that the funds are available. You may know, for instance, when your customer gets their paycheck. Scheduling NSF re-presentment on or directly after this date increases your chances of accessing the funds and clearing the check.
With Forte’s NSF re-presentment service, you are paid 100% of the face value for each recovered check. Additionally, we’ll pay you a rebate of 50% of the recovered NSF fee. It’s available at no cost and with no contract. And you don’t have to be processing a certain amount to get it – there are no minimums.
Using a service of NSF re-presentment will help you recover your lost costs. And if it’s totally free, why wait? Give us a call at 866.290.5400. We’d love to go over the options with you.
Photo credit: Ali