TRAVERSE Global v11.1

Non-Sufficient Funds (NSF)

In the US banking industry, the term “non-sufficient funds” (NSF) is used to indicate that a demand for payment (a check) cannot be honored because insufficient funds are available in the account on which the instrument was drawn. In simplified terms, a check has been presented for clearance, but the amount written on the check exceeds the available balance in the account. It is often referred to as a bad check, a “bounced” check, or a rubber check. Businesses frequently use the term dishonored check.

When an NSF check is returned to you, the method to correct the original transaction will vary depending on the status of the original invoice. The status of the invoice will remain Open until Periodic Maintenance has been run to change the status of those fully-paid invoices to Paid.

Periodic Maintenance Has NOT Been Run

Invoices will remain at the Open status in the open invoices table until they are fully paid and periodic maintenance has been run to change the status of those fully-paid invoices to “Paid”.

When an invoice is still at the Open status, the invoice will be displayed on the Invoice Inquiry and Hold/Release Invoices screens when the customer ID is selected.

To reverse the cash receipt for an invoice that is still at the Open status, follow these steps:

1. Select Cash Receipts from the Transactions menu.
2. Enter the Batch Code, Payment Date, GL Pd/Year, and Customer ID information.
3. Enter the Payment Amount of the NSF check as a NEGATIVE (-) amount.
4. Select the Payment Method ID the NSF check was originally entered into. If the payment method has a check type, enter the Check No of the original NSF check.
5. Enter the Invoice No for the invoice(s) the NSF check paid for.

   The invoices will not be listed in the Open Invoice Summary area of the screen. Invoices that have a receipt applied to them that fully pays them are not displayed in the cash receipts function.

6. Enter the Payment amount as a NEGATIVE (-) amount for each invoice the NSF check originally paid for.
7. Print your Cash Receipts Journal, Method of Payments Journal, and Deposits Journal, on the Transaction Journals menu, for the batch into which you entered your reversing cash receipts. (The Cash Receipts Journal is the only required journal to print.)
8. Post the batch you entered your reversing cash receipt into, using the Post Cash Receipts function on the Transaction Journals menu.
9. Use the Invoice Inquiry or Hold/Release Invoices function to verify the negative cash receipts have been applied to the correct invoices.

Periodic Maintenance Has Been Run

Invoices will be changed to the Paid status in the open invoices table once they are fully paid and periodic maintenance has been run to change the status of those fully-paid invoices to “Paid”.

When an invoice is at the Paid status, the invoice will be hidden on the Invoice Inquiry and Hold/Release Invoices screens when the customer ID is selected.

A credit memo with a payment will need to be entered EXACTLY as the original invoice(s) that was paid with the NSF check.

To reverse the cash receipt for an invoice that is at the Paid status, follow these steps:

1. Select Transactions from the Transactions menu.
2. Select Credit Memo as the Transaction Type for the transaction you will be entering.
3. Enter the Batch ID, Location ID, and Sold To information.
4. Enter the original invoice number into the Original Invoice No field, for the invoice that was paid with the NSF check.
5. Accept the default for the rest of the fields on the Header tab, or change any that were changed when the original invoice was entered.
6. Select the Item Detail area and enter the line items that were on the original invoice exactly as they were when the invoice was first entered.
7. Select the Payments tab and enter the payment Amount, Payment Method ID, and Check No from the NSF check.

   Enter the payment amount as a positive number. When the post is done, TRAVERSE knows this will be a negative cash receipt, because it is entered into a credit memo.

8. Print the Miscellaneous Credits Journal and Cash Receipts Journal from the Transaction Journals menu. You may also print the Methods of Payment Journal and Deposits Journal.
9. Post the credit memo and cash receipt using the Post Transactions and Post Cash Receipts functions on the Transaction Journals menu.
10. Select the batch you entered your credit memo in the Post Transactions function and select the batch in the Post Cash Receipts function the payment was entered into and click OK to post the transaction and cash receipt.

    This will “Undo” the original invoice and payment.

11. Select Transactions from the Transactions menu.
12. Enter the invoice EXACTLY as the original invoice was entered, using the original invoice number in the Invoice No field.
13. Do NOT print this invoice using the Print Invoices function on the Transaction Journals menu. This will overwrite the invoice number with the next available number.

    To prevent this you may want to print the invoice Online once you enter the original invoice number and finish entering all the items.

14. Print the Sales Journal, from the Transaction Journals menu, for the batch you entered the invoice into.
15. Post the invoice using the Post Transactions function, on the Transaction Journals menu, selecting the batch you entered this invoice into.

    This will “Reinstate” the invoice to the original state prior to applying the NSF cash receipt.

16. When you use the Invoice Inquiry and Hold/Release Invoices functions you should now see your Credit Memo, negative Payment, and the Invoice you just posted.
17. The next time Periodic Maintenance is run, the Credit Memo and Payment will be changed to the Paid status and no longer show on these screens.

NOTE: If the original invoice was entered through Sales Order you may enter your credit memo, payment and invoice into the Sales Order, Orders function. Entering the transactions into Accounts Receivable will have the same effect as using Sales Order. The only difference would be the source of the transactions in history.