What are Days with Non Sufficient Funds (Days NSF), and why should I care?
Days with non-sufficient funds (NSF) refers to the status of a business checking account that does not have enough money to cover a transaction. This is measured on a per day basis.
Non-Sufficient Funds Displayed in Sunrise
How does it occur?
When the transaction attempts to withdraw more money than is currently in the account, the banking institution will alert your account as having not enough money to withdraw. When this happens and when no deposit is made by the end of the business day, the institution will deemed that day as finishing with Non-Sufficient Funds. For this example, if you have a checking account with a $50 balance and a transaction greater than $50 occurs, if no other capital is added to the account, a NSF status will trigger.
Are NSF Days the same as Negative Cash Flow?
While they are related, days with non-sufficient funds are NOT the same as days with a net negative cash flow. An NSF is designated as a single day, where negative cash flow is typically determined on a broader scale.
Since a small business owner could have a outflows exceeding inflow for a given day that would trigger a single NSF, they still may have enough cash in the account to cover the outflow of cash for the monthly period.
Why should I be concerned about NSF Days?
In addition to being subject to overdraft fees and possible other penalties, repeated Days NSF tends to be reviewed by financial institutions and investors. When seeking a loan, for example, a lender may identify NSF days as a risk factor on approving a loan or the interest rate required.