What is the proper handling for a check that is returned for insufficient funds?

• A. Notify the payer but keep posting as paid.
• B. Void the posted check, place a hold on the case, issue a bounce notice, and determine next steps per policy.
• C. Ignore and re-deposit automatically.
• D. Accept the check as is with no action.

Answer: (B)

Handling a check returned for insufficient funds requires reversing the payment and following approved procedures. When a check bounces, you must void the posted payment so the record reflects that the funds didn’t clear, and you should place a hold on the case to pause further actions until the issue is resolved. Issuing a bounce notice formally communicates to the payer that the check did not clear and explains the next steps they need to take. Finally, determine the next steps per policy, since institutions have specific rules for re-deposit attempts, replacement payments, fees, or escalation. This approach prevents misreporting a paid item, protects the account, and ensures consistent handling in line with established procedures.