What Is Check Representment?

Check representment is a service offered by banks that resubmits a bounced check to the check writer's account until funds are available for payment. In the check representment process, the bounced check is usually converted into an electronic item for representment. Many banks and financial institutions offer check representment services to their business clients at no charge.

Key Takeaways

  • Check representment is a service offered by banks to resubmit a bounced check to the check writer's account until funds are available.
  • Typically banks present a check for payment twice to the Fed's clearing system. After this, the check has to be presented manually at a branch for processing.
  • Check representment reduces time and expense involved in collections processes for businesses and helps banks flag accounts that have a history of bounced checks.

Understanding Check Representment

For businesses that rely on incoming checks, there are many benefits of check representment. It gives businesses another opportunity to collect payment for products supplied or services rendered, eliminating the time and expense of the collections process.

It also enables a bank to flag accounts that have a history of bounced checks, allowing the bank to warn a businesses of potential non-payment, so that it can require advance payment. Representment also often gives electronic checks priority over paper checks, since they have lower handling costs and shorter processing times.

Typically banks present a check for payment twice. This is in line with the Federal Reserve's operating letters which states that its check processing service cannot be used more than two times. But the Uniform Commercial Code (UCC), which is used to determine procedures for commercial contracts, does not have explicit instructions for the number of times that a check is presented. In such cases, businesses can present the check manually for clearing at a bank's branch.