[jaynyone]

In my previous life as an underwriter, we counted NSFs by day. If a merchant had 4 NSFs all lumped in on one day, we only counted it as 1. This seems to have been the case with most funders I have been working with.

I just had a very solid merchant declined for NSF because there were 2 days that he had multiple overdrafts on. Thoughts on this...worth fighting or just move to another funder? I'm not looking for a bunch of solicitations for the business - just looking for some direction...would you fight it or is this something that is common practice now?

[J.Celifarco]

I would try fighting it. If he only had the 2 negative days in the month then you have a leg to stand on in the fight. That said make sure all the other months are clean before having the fight

[FUSIONCAPITAL]

I agree, sometimes things like this need the extra look. What should be more of a concern is are these items being returned?

[ygs]

Unfortunately with many lenders there are Junior underwriters approving/declining deals, and most of them have minimal experience and decline based on amount of NSF/Overdraft charges while not realizing that many come from the same day. I have had multiple issues and have had to help educate the Jr underwriters in cases where they were simply not giving adequate training. In this day and age a lot of lenders only start the underwriting process once contracts are back and therfore it is up to the discression of the Jr Underwriter to put forth the offer/decline

[CreditGuy]

While the applicant might have had multiple NSFs on a single day, the fact remains that each NSF item represents an attempt to satisfy a liability of the applicant using funds that weren't at their disposal. If the bank returns the items presented NSF, that makes things markedly worse. The first issue signals that the borrower's cash flows are so tight that they are intentionally making payments using funds that aren't there or aren't collected. The second issue signals that they now have X number of vendors/creditors/employees that they attempted to pay who possibly had those items returned unpaid, which is a negative signal that will impact the applicant's ability to present payments and/or utilize trade lines with those impacted parties going forward. (e.g. You bounce a check to a supplier that you had Net 30 terms with, and they now cut you to Net 10 or COD) Writing 30 bad checks is much worse than writing 3, regardless if they all occur on the same day.

Underwriting a file should not only be colored by the ability to collect the debt, of which only counting it as one NSF if they occur on the same day is a function, but also to assess the general character and capacity of the applicant in how they manage their cash position and relationships with creditors and payees.