An NSF check is a check that is not honored by the bank of the entity issuing the check, on the grounds that the entitys bank account does not contain sufficient funds. It may also arise when a bank account has been closed. An NSF check may be referred to as a bad check, dishonored check, bounced check, cold check, rubber check, returned item, or hot check. When a check bounces, it results in late payments and affects the relationship with customers. Dealing with an NSF check requires additional administrative work, and it can strain the business relationship if the NSF check was received from a customer or client. Among the consequences of issuing an NSF check are actions by financial institutions, civil liability to the drawee, and possible criminal penalties. The civil penalty is less severe and will usually set the total amount the customer has to pay your business for issuing a bad check. The amount is almost always more than the amount on the check because the customer will be expected to cover any bank and court fees your business had to pay. A customer can also be penalized for any further damages that your business may suffer due to the NSF check. To avoid NSF checks, someone issuing checks can conduct ongoing check reconciliations, maintain excess funds in a checking account, or opt for overdraft protection through their banks.