Not sufficient funds or NSF is the term used to describe a check that has been returned by the bank on which it was drawn because the checking account balance was less than the amount of the check.

A check noted as not sufficient funds, NSF, or insufficient funds is also referred to as a returned check, a return item, a check that bounced, or as a rubber check since it was bounced back to the payee by the bank on which the check was drawn.

Checks returned as not sufficient funds usually result in bank charges for both the payee and for the person writing the check.

A check returned as not sufficient funds could be an indication that the financial condition of the maker of the check had declined. This could signal a potential credit loss if the maker of the check is a customer to which you extend credit terms on its purchases.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

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