I've seen computer systems set up two different ways to handle NSF checks, and wondered which is the most common (although I probably already know.)
1) Check comes in on one day with an insufficient balance in the account to pay the item. The account is automatically charged an NSF fee and the item kicks out on that day's NSF list to be determined the next morning whether it will be paid or returned by an officer.
2) All checks pay automatically regardless of balance, then the ones that were paid against NSF funds are either approved or disapproved the next day by an officer, the fee is charged to the account, and the item either remains as paid or is backed out and returned.

We non-post everything and then make decision whether to pay or return, charge or not charge.

Prior bank posted everything into overdraft, charged fee, then reversed if decision was made to return item.

I prefer posting everything into od and reversing if returning. It's much easier for the customer to understand because they see everything as it occurs.

I actually prefer the first because of the way it shows up on the reports, the customer's statement, and the overdraft list is never accurate.

We post everything into overdraft. First, because we actually return very few items, and second because we utilize a positive Balance File (PBF) for our ATM/POS transactions.

We had a problem with our previous operating platform because we couldn't reverse return items that posted the last business day before the statement cycle. Our current platform unposts those items.

It's difficult to explain to a customer who makes a deposit on the same day you pay a non-posted NSF item that you are charging them a fee because the item actually came in the day before when there were not enough funds in the account. On the customer's statement, there is no OD balance showing because the deposit posted. Definitely prefer posting everything and reversing if returning so customer can see exactly what happened.

Yes, I've explained that to a customer many a time that the check comes in, the account doesn't have sufficient funds to cover, it charges a fee, and kicks out to pay or return the next day. It was never a big problem though.

Previous S&L put everything into non-post. Before we opened for business, we made decisions to return/charge, return/no charge, pay/charge OD, or just pay/no charge. Then we processed the list----all before opening. That way there was no questions from customers making early deposits, then seeing returns. It was all real time - based on the previous day's balance. Statements and history portrayed exactly what happened and when. It was a great system!