¶ 1. Overview
The NSF feature allows law firms to record situations where a client’s cheque or payment is returned by the bank due to non‑sufficient funds. When an NSF event occurs, the original payment must be reversed to ensure the client’s financial records, outstanding balances, and trust/commercial ledgers remain accurate.
This feature supports proper financial reconciliation, compliance, and transparent client accounting.
¶ 2. When to Use the NSF Feature
The NSF feature is used when:
- A cheque deposited into the firm’s bank account is returned unpaid
- A client’s payment fails due to insufficient funds
- A previously posted payment must be reversed
- The firm needs to restore the outstanding invoice balance
Using the NSF workflow ensures the reversal is handled correctly and fully tracked.
¶ 3. Recording an NSF Payment
When a payment is returned NSF, users can record it through the NSF feature.
¶ Fields Typically Captured
- Bank Account – The account where the original cheque was deposited
- Date – Date the NSF was identified
- Client/Matter – The client associated with the returned payment
- Original Payment Reference – Receipt number or payment ID
- Amount – The amount being reversed
- Description – Notes explaining the NSF event
This creates a clear record of the returned payment.
¶ 4. NSF Reversal Effects
Posting an NSF entry automatically:
- Reverses the original payment
- Restores the outstanding invoice balance
- Updates the client’s financial ledger
- Adjusts trust or general bank balances (depending on the original payment type)
- Logs the NSF event for audit and reporting
This ensures the firm’s financial records remain accurate and compliant.
¶ 5. NSF Fee (If Applicable)
Some firms charge an NSF administrative fee to the client.
If enabled in firm settings, users may:
- Add an NSF fee as a new client expense
- Include it in the next invoice
- Track it as part of the client’s outstanding balance
This helps firms recover costs associated with returned payments.
¶ 6. Reviewing NSF History
The NSF feature maintains a list of all NSF events recorded for the client.
¶ Typical Columns
- Date
- Bank
- Client/Matter
- Original Receipt Number
- Amount
- Description
- Status (Posted)
This provides a complete audit trail for financial accuracy and compliance.
¶ 7. Integration with Other Features
NSF integrates with:
- Invoice Payments – Reverses previously posted payments
- Client Invoices – Restores outstanding balances
- General Transactions – Adjusts bank and ledger entries
- Client Detail – Displays NSF history
- Reports – Reflects NSF activity for accounting and audit purposes
This ensures a consistent and accurate financial workflow.
¶ 8. Summary
The NSF feature provides a structured, compliant method for reversing payments that are returned due to insufficient funds. With automatic balance adjustments, ledger updates, and full audit tracking, it ensures accurate financial management and transparent client accounting.