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This document explains how to process a check payment
that has been returned to you as NSF, and how to charge
an NSF fee to the account.
Let's assume that an operator posts a check payment to
a debtor account. A few days later, the check is returned
to you NSF. You process the check, including your NSF
fee. Later on, you receive another payment from the
debtor that covers both the NSF check and your NSF fee.
The steps for processing include:
- Posting the NSF check as an
identical transaction but with a NEGATIVE amount.
- Adding an NSF fee to the debtor.
- Settling your accounts when a good
payment is received.
To perform these steps:
* You must be familiar with the financial aspects of
Collect! Posting transactions, setting up transaction types,
and understanding statements and invoices in Collect!
are all aspects of handling NSF payments.
* You need the proper transaction types in
your system.
Three transaction types are used in the following example:
101 - Payment by Check
301 - NSF Charge due Agency
106 - Payment of Agency NSF Fee
* The original transaction for the check payment
has to be entered in your system. If it has not been
entered yet, then post the payment as outlined in
How To Post A Debtor Payment.
The rest of this document walks you the processing
steps.
The step by step instructions may follow a
different method of posting transactions than you
normally use. Try working through these steps, as this
is the basic method. Once this theory is understood,
you can apply it to your own method of posting
transactions.
Posting The NSF Check
Let's assume that a week has passed and the bank has
returned a check to you NSF. You must reverse
the original Payment transaction and also create a
new transaction to add your NSF fee to the debtor's
Owing.
A check payment entered in Collect! can be reversed
by posting a reversal payment transaction. This is
a payment transaction with the EXACT same dollar value,
identical to the original amount posted as payment
for the debtor. What makes it a reversal is that this time,
the amount of the payment is entered as a NEGATIVE
amount.
For your accounting and paper trail, it is best to
use for the reversal NSF transaction, the exact same
Transaction Type as the initial payment, as well as the
exact dollar value but as a NEGATIVE amount.
We will go to the Debtor and reverse the original payment.
We will use the exact same Transaction Type and information,
entering the same dollar value, but making it NEGATIVE.
This reverses the payment.
That is, a Payment transaction is entered exactly the
way it was first posted, EXCEPT, entering the amount in
the TO US or DIRECT field as a NEGATIVE amount.
If the initial payment was posted as TO US
then the NSF transaction must be posted as TO US.
If the initial payment was posted as DIRECT, then the
NSF transaction must be posted as DIRECT.
1. Start Collect! and sign in as you would
normally. Select Browse from the top menu bar and
then select All Debtors from the drop-down choices.
The list of all debtors will display.
2. Begin typing the name of the debtor you wish to post
the payment to. As you type, Collect! will take you
through the list and stop at the closest match.
3. Click on the debtor, or if the debtor is highlighted, just
press Enter or F5 to open the Debtor form. The debtor you
selected should be displayed.
4. Select the FINANCE button to display the list of
transactions for this debtor. Press F3 to enter a new
transaction.
5. Enter 101 in the Type field.
Or, press F2 to view the list of transaction types
and select Code 101 from the list.
6. Enter the amount of the original check payment, in
the TO US or DIRECT field, but make it NEGATIVE.
7. Press F8 or OK to save the transaction and return to
the Transaction list. Here, you should see the reverse
entry.
Adding An NSF Fee
To post NSF fees to a debtor, you must use a
Fee Transaction Type. We will use the NSF Charge
Due Agency Transaction Type that is in the Demonstration
database. It is Type 301. By default, this adds a $25.00
NSF Fee to the debtor.
1 Select F3, or select the NEW button,
to open a new Transaction form.
2. Enter 301 in the Type field.
Or, press F2 to view the list of transaction types
and select Code 301 from the list. Because this
Transaction Type was set up previously, Collect! will
fill in the following data automatically.
- $25.00 NSF fee has been filled in as a NEGATIVE amount
in the To Agency field.
- Omit From Daily Cash Report is switched ON.
- Omit From Client Statement is switched ON.
3. Press F8 to save the transaction and return to the
Transaction List. The initial payment, the reversal and the
NSF Fee transactions are all displayed in the Transaction
list.
4. Select OK to return to the Debtor record.
5. Ensure that the money fields on the Debtor screen have
all been updated correctly. If they don't appear to be correct,
select the RECALC button on the lower right of the Debtor form.
6. If the totals still do not appear to be correct, select the
FINANCE button and open the posted transactions. Make
sure that dates and settings are correct.
If your NSF Fees are always the same, you can
set up a transaction type for your NSF fees. You may
edit the Type 301 transaction type by entering your own
fee amount in the To Agency field. Make
sure you enter it as NEGATIVE amount.
Settling Your Accounts
When the debtor makes a "good" payment, you must
post two entries, one for the principal amount and one
to cover the payment of the NSF fee. (It is assumed that
you have already posted a 301 NSF Charge Due Agency
Fee transaction to the debtor's account when you
processed the NSF check.)
To post the two payment entries at once, we use the
Post Debtor Transaction form.
1. From the Main Menu, select the button
labelled Daily Administration to
display the Daily Administration menu.
2. Select the button labelled Payments and
Charges to display the Payment and Charges
menu.
3. Select the button labelled Debtor Payments
and Charges to display the
Post Debtor Transaction form.
You may use the Post Debtor Transaction form
to post several transactions at the same time. We are
going to use it to post two transactions, one for the
principal amount of the check, and one to pay the
NSF fee.
- To post a credit for the NSF Fee in the To Agency,
we use a Payment type transaction -Type 106
in the Demonstration database. Collect! will fill in the
Description, Credit and Commission fields automatically.
This method hides the NSF fee collected by the agency
from the client's statement while crediting the payment
to the debtor's account.
- To post a credit for the Principal, we use a Payment
type transaction - Type 101 in the Demonstration
database. In the field labelled To Agency,
enter the amount of the payment that is applied to the
debtor's Principal. This is entered as a POSITIVE
amount and it decreases the debtor's Owing.
When you view the debtor's account, the Owing will
reflect these two credits posted as payments to the
account.
Wrapping It Up
The methods outlined in this document give you an
easy and effective way to process NSF checks received
on your accounts. You can modify the transaction types
or the settings used, if your needs require this. The
steps would remain the same.
The steps are:
To reverse a payment, a negative payment is
entered, for the same amount and of the same transaction type.
To enter an NSF fee, a fee transaction is posted.
When a "good" payment is received, two payments
are posted - a check payment and an NSF fee
payment.
See Also
- Transaction Type Basics
- Transaction Type Samples
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