Exception item is a term used in banking used for describing unprocessable check. Situations in which this problem appears are, for example, when account of the customer has been just closed before the payment went through, also when there is some kind of mistake on the check like missing a signature or incompleting some other steps needed to successfully finalize the check which often happens when check isn't entirely filled out. An exception item which includes stop payment can also simply happen for a request of the account holder to cancel payment or a check that he already released but that has not been processed yet (Schroff, 2007).
Exception item in the case of stop payments
There are a few important informations that need to be known and delivered to the bank, to stop the payment, and some of these are: to when the check is payable to, the date, and of course the check number. With this information we can ask for pausing or canceling the check and if they are all correct banks flags the check and does its job that is preventing the check from clearing it out (De Jonghe, 2010).
There are some banks that are kind enough to offer their account holders possibility to refresh or to extend the stopped payment, and to have this done all the customer needs to do is to make written or verbal request. It is very useful for banks too especially when they cannot find this particular check. Bank has a deadline to locate the check and this period goes up to six months, but after that time pass the stop payment will naturally expire. Cost holders can issue the stop payments and it costs them some small amount of money which is about $30, but every bank can have its own fee (Pozsar et al., 2010).
Reasons why account holder can stop the payment:
- Incorrect amount of money in the check that has been sent
- Situations where the check already had been put in the mail they can simply cancel the purchase.
- Many other reasons, and most of them are successfully accepted, and it is mostly uncommon that these requests are denied (White, 2014).
Technology and an exception item
Banks personnel now have all the technological support in resolving exception items in more efficient manners.
By automating the process of handling an exception item some companies save a lot of time:
One of the methods is to streamline the whole process with the use of software connected to cloud. It allows the bank to finalize the accounting process in a centralized and secure manner. The other method that banks take advantage of is to use the routing or transit number of exception items. The bank uses the essential information connected to transit number to advance the accounting process (George & Kumar, 2013).
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- George, A., & Kumar, G. G. (2013). Antecedents of customer satisfaction in internet banking: Technology acceptance model (TAM) redefined, Global Business Review, 14(4), 627-638.
- Gorton, G., Metrick, A., Shleifer, A., & Tarullo, D. K. (2010). Regulating the shadow banking system- with comments and discussion, Brookings papers on economic activity, 261-312.
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- White, E. N. (2014). The regulation and reform of the American banking system, Princeton University Press, 1900-1929 (Vol. 525).
Author: Mateusz Wójcik