How can returned item fee affect the business

How can Returned Item Fee Affect the Business

Nowadays, businessmen and the four types of entrepreneurs use banks in any transactions. They know how convenient a banking transaction could be if they used it. These entrepreneurs value time management necessary to them because they consider time as gold, and each minute for them is valuable. Moreover, different business transactions always use banks as their mode of payment or negotiations. Payment is essential in every transaction you do, whether it is about business or organizations. All businesses make sure not to have conflict especially on return item fee.

What is Returned Item Fee? 

When your financial institution declines or returns a transaction due to insufficient funds, it assesses a returned item fee, commonly known as a nonsufficient funds (NSF) fee. The standard cost for each returned item ranges from $27 to $40. Additionally, returned item fee may be assessed if an account has insufficient funds to cover your transfers, withdrawals, and checks. Even though these fees are standard, they can add up and indirectly cause credit problems. 


Payments made with debit cards or checks may be subject to these fees. The account needs more funds to cover the payment, resulting in a “bounced” or “bad” cheque. In addition, a bank can reject a payment when a check bounces and then charge the account holder a returned item fee.

How does it affect business? 

Your company can incur costs, damage its reputation, and negatively impact future transactions due to returned items. Furthermore, many businesses strive to be successful and come up with success quotes for businesses. On the contrary, to maintain a good credit rating and avoid paying unnecessary expenses, your business needs to understand their means.

Financial impact 

The returned item fee can add up quickly if you have numerous declined transactions. Some banks charge multiple returned item fees in a day if several items are returned. Moreover, A returned item fee is a charge imposed by a bank when a customer’s check or electronic payment is returned unpaid due to insufficient funds or other reasons.

Business reputation

Late payments from declined transactions frequently harm your interactions with suppliers, customers, or sellers. Furthermore, if your company develops a bad reputation for writing negative checks, other companies might stop doing business with you.

Future banking activities 

Although returned and bounced checks don’t directly affect your credit score, they can harm your ChexSystems report, which many US banks use to assess the risk of your business. Moreover, banks might only let you open a bank account if you have an excellent ChexSystems report.

Account closure 

Your bank may close your account entirely if your business has too many returned items. Furthermore, debt collection agencies may turn over accounts with returned item fees, which could harm your credit.

How to avoid returned item fees 

Although everyone is trying their best to avoid the returned item fee, it would be an advantage for you to know in an event or happenings that you accidentally wrote a bad check. Moreover, here are the different ways to avoid returned item fee: 

Monitor your account regularly. 

It’s essential to regularly monitor your balance if there’s enough money on your account to support your check transactions. Furthermore, online and mobile banking lets you check your account balances anywhere.

Track your financial transactions.

Compare your account balance to your check transactions and automatic payments. Moreover, ensure your account has enough money before you write checks or before your direct debits are due.

Sign up for a balance alert 

Some banks provide email or SMS warnings when your account balance dips below a specified amount. Furthermore, having balance alerts may assist you in identifying questionable charges.

Deposits extra funds in your account 

Set a minimum target balance to act as a safety net against a lack of funds. Make regular money deposits to keep your account balance within this desired range. Moreover, whenever your balance drops below your goal, add more money as soon as possible.

Sign up for overdraft protection 

Most banks provide overdraft protection when you open a business bank account. To cover any transaction against insufficient funds, your bank transfers money from your line of credit, saving account, or credit card when you have overdraft protection. Furthermore, overdraft protection can protect you from paying returned item fees and damaging your business relationships, the services are typically charged at a cost.



Choose a bank without NSF fees 

Some distributors waive NSF fees. Moreover, Bluevine, for instance, rejects various transactions due to insufficient funds but levies no fees for the error.

Use backup sources 

Link your bank account to a savings or emergency fund. Furthermore, you’ll have to pay an overdraft fee to withdraw money from it, but eventually, this will be less expensive than a fee for an overdraft on a loan or an NSF fee.

Access your money on time 

Your paycheck delay may have caused you to need more money in your account than expected. You rely on fast deposits to make your payments on time, but you’re reluctant to approach your employer too frequently for an advance. Moreover, you can access your payment whenever you want and make payments using an app like Earnin. You won’t be charged for a returned item, and when your paycheck comes in, you can pay the app back with no additional fees.

Budget carefully 

Your best option to avoid a returned item fee after earning considerable money is to create a careful budget. Balance your checkbook and accounts to ascertain your cash balance. Furthermore, your online banking statement and other apps can be helpful, but double-check before placing too much trust in the number they show is always a good idea. Apps like GoodBudget and Cleo can help you learn how to handle your money well.


If a business writes a bad check, it should promptly inform the recipient and offer to replace it with a valid form of payment, covering any additional costs incurred. Open communication and proactive resolution are vital to preserving the business’s reputation. The company must then take measures to avoid such incidents in the future, for example, by enforcing more rigorous financial controls or imparting additional training to employees.


Repeated returned item fees can affect and damage your business finances, banking account, and reputation. So, do everything you can to avoid those fees for returned items on your property. Moreover, to prevent that, you should have time to check your account balances and ensure that you have secured enough money to cover all the expenses. 

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