Procedure for Handling and
Accounting
for Checks Returned Unpaid by the
Bank
All checks returned by the bank are charged back
to the department originally receipting the checks.
This is accomplished by a debit memo issued by the
Office of the Bursar. Upon receipt of the debit memo,
the department will attempt collection of the debt
plus a $30.00 service charge for each returned check.
When collection is made, a new receipt will be written
for the amount of the debt, including the $30.00 service
charge.
Following are detailed instructions for this procedure:
When a check is returned by the bank, the Bursar's
Office will initiate the debit memo charging
the cost object to which the department (Exhibit
A) normally receipts their income.
The check attached to the audit
copy (green)
of the debit memo will be sent to the department
for collection. The departmental copy (pink)
will be returned to the department with a SAP journal
entry number referenced to allow reconciliation
to SAP.
If the department maintains accounts
receivable records, the debit memo should be posted
as a charge to the account of the customer or client.
Within 10 days of the receipt of
the debit memo, contact the maker to collect the
funds. The longer you wait to make contact the harder
it is to collect.
If the check was returned because
of "insufficient" or "uncollected
funds," it has been returned at least twice
as a paper item and possibly returned a third time
as an electronic item so it cannot be redeposited.
There is a $30.00 service charge
for each check returned. If they should say it was
the bank's error, we will waive $10.00 of the service
charge upon receipt of a letter from their bank
attesting to that fact. The remaining $20.00 is
a hard charge which cannot be waived.
Payment, including service charge,
must be by money order or cashier's check; and,
if they pay in person, they may pay cash.
Payment should be received within
7 days from the date we notified them of their indebtedness.
When payment is received, the department
may issue a new receipt in the format of Exhibit
B crediting the accounts charged
on the debit memo and include that with their regular
deposit. Or, prepare a separate Bursar Advice (Exihibit
C) for that payment only.
The check may be returned to the
maker when it has been redeemed. Marked on the face
of the check "Void" and on the back mark
"Void" thru the endorsement. Do not mark
the check until the maker has paid the debt and
the $30.00 service charge.
The green copy and the pink copy
of the debit memo should be marked in the "check
redeemed" box along with the date and the number
of the receipt just written. The green copy should
then be included with the remittance or deposit
to the Bursar. The pink copy should be kept in the
department.
If the department has not collected
within a reasonable amount of time (30 days from
the date of the debit memo) contact the Bursar's
Office for advice on what further collection efforts
may be employed.
The above procedures and restrictions are not subject
to waiver or change by the department or office involved.
Need for interpretation should be discussed with the
Bursar.
