Best Practices for Healthy Bank Management and Transactions (to reduce Holds/Returns)

A check can be rejected by a bank for a variety of different reasons. Banks have the discretion to speed up funding or alternatively place funds on hold. It is up to you to maintain a positive relationship with your bank by keeping a positive balance and even developing a personal relationship with your banker. With that in mind, the below are some best practices to help you reduce holds and/or returned checks:

Maintain a healthy bank balance.

If an account is newly opened with no transaction history, and has little-to-no balance available, a bank will most likely place a Hold on pending transactions to secure the funds. However, at times they may reject or return the transaction completely in order to reduce the risk of the merchant sweeping the account entirely. 

We recommend maintaining a healthy balance at all times, and at minimum reserving 5x the amount of your highest batch total. (For example, if receiving $10k in payments, it's a good idea to keep $50k or more in your balance)

Ensure Correct Routing and Account Number

If a Routing or Account number may be entered in incorrectly, and the bank cannot locate an account, and repeated instances of this could raise flags with your bank.

Our recommendation is to either confirm your customer's account information with a voided check or, utilize SeamlessChex's Bank Authentication to have your client's login to their bank to authorize the payment.

In any scenario, if you see a gray 'Unable to Verify' on your dashboard, consult with your client to ensure that they have provided accurate information. 

Ensure your customer has sufficient funds

If a client/customer has insufficient funds, the Bank may mark the account as NSF and reject a payment preemptively. If the check is initially accepted, this could result in a bounced check with additional fees. Repeated instances of this could raise flags with your bank.

Our recommendation is to utilize either Funds Confirmation or Bank Authentication to ensure that there are enough funds in your client's account at the time of payment authorization.

Ensure the correct Name and Address

Ensure that the customer address entered matches up with the address their bank has on file. This may not always be their most current address, and so it is best to verify with your client before submitting a payment. A bank that cannot confirm the address may reject or chargeback a payment.

Similarly, Banks will often reject a check if the name on their bank account does not match with what was provided. One way to verify the correct name and address is to request a voided check from your clients.

Make sure the payment has not been previously deposited

If the check number was previously already used for a client, then the check in hand could be seen as 'previously deposited' and would bounce. If a client is being billed for the same amount again, make sure the check number is different from a prior transaction.

Discuss Large Transactions with your bank

Not all bank branches can handle a large transaction without advance notice or written authorization. Your bank may monitor your transaction patterns, and a transaction that breaks a pattern may be flagged. heck with your bank if this may be the case and consult with them if you anticipate receiving a large transaction. 

Ensure that your client's account can be debited

Many savings accounts prohibit check payments, and could either place holds or reject payments completely. Similarly, there are many accounts that are incompatible for debits, such as Credit Card Check, Line of Credit, Home Equity or a Brokerage checks (many of these are considered Non-Demand Deposit Accounts).

You can stay on top of this by utilizing Basic Verification from SeamlessChex, already included in all plans. If a payment shows up with a red 'Failed' it means it most likely is a Non-Demand Deposit Account, or a Savings account. It's best to reach out to your client and request a checking account.

Ensure that your client is not a Bad Checkwriter

Although uncommon, some checkwriters have become flagged for repeatedly writing fraudulent checks, and are marked in a Bad Checkwriters database.

You can stay on top of this by utilizing Basic Verification from SeamlessChex, already included in all plans. If a payment shows up with an orange 'Risky' it may indicate that your payment may bounce either due to negative balances or because a bad checkwriter. It may be worth reaching your client to address.