If a direct debit from the EFT file is rejected after sending it to the bank, the bank typically sends you a report to inform you of any declined transactions. Contact your bank for specifics on how your bank handles this situation.

Once you receive the declined transactions, you can open the batch, enter the rejection codes, and commit the batch. When the batch is committed, the gifts with rejection codes will be exceptions. Create a batch of exceptions if the declined transactions should be kept together.

For UK Users only:
Dealing with transactions rejected by BACS
If an exception batch was created when the direct debit batch that included rejects was committed, the Transaction Pending flag will remain on the recurring gift or pledge for any transactions in that exception batch. 
The reason for rejection should be resolved and the transaction row either deleted from the exception batch, or the transactions in the batch should be re-presented to BACS.

For example, if the direct debit is monthly then you may decide that once the reason for rejection has been resolved that there is insufficient time to re-present to BACS before the next month’s collection falls due. Therefore you can delete the row in the exception batch
skip the transaction, so that the recurring gift or pledge is ready for the next collection.

However, if the direct debit is scheduled to be paid quarterly or annually, suggest that the transaction is not skipped and this transaction should be included in the next batch when Automatically generating transactions / payments.

Even if the batch of exceptions is not created, any rejects from BACS should be resolved and the appropriate steps taken to either skip or not skip the next transaction, depending on the direct debit frequency and whether or not this transaction should be included in the next collection batch.