diff --git a/pay-api/migrations/versions/2024_01_22_fccdab259e05_.py b/pay-api/migrations/versions/2024_01_22_fccdab259e05_.py
new file mode 100644
index 000000000..6d67b9eb2
--- /dev/null
+++ b/pay-api/migrations/versions/2024_01_22_fccdab259e05_.py
@@ -0,0 +1,27 @@
+"""Adding invoice_number column to non_sufficient_funds table
+
+Revision ID: fccdab259e05
+Revises: b65365f7852b
+Create Date: 2024-01-22 17:13:44.797905
+
+"""
+from alembic import op
+import sqlalchemy as sa
+from sqlalchemy.dialects import postgresql
+
+# revision identifiers, used by Alembic.
+revision = 'fccdab259e05'
+down_revision = 'b65365f7852b'
+branch_labels = None
+depends_on = None
+
+
+def upgrade():
+    op.add_column('non_sufficient_funds', sa.Column(
+        'invoice_number', sa.String(length=50), comment='CFS Invoice number'))
+    op.create_index(op.f('ix_non_sufficient_funds_invoice_number'), 'non_sufficient_funds', ['invoice_number'], unique=False)
+
+
+def downgrade():
+    op.drop_index(op.f('ix_non_sufficient_funds_invoice_number'), table_name='non_sufficient_funds')
+    op.drop_column('non_sufficient_funds', 'invoice_number')
diff --git a/pay-api/src/pay_api/models/non_sufficient_funds.py b/pay-api/src/pay_api/models/non_sufficient_funds.py
index d4a71abfc..16bfed190 100644
--- a/pay-api/src/pay_api/models/non_sufficient_funds.py
+++ b/pay-api/src/pay_api/models/non_sufficient_funds.py
@@ -40,12 +40,14 @@ class NonSufficientFundsModel(BaseModel):  # pylint: disable=too-many-instance-a
             'id',
             'description',
             'invoice_id',
+            'invoice_number'
         ]
     }
 
     id = db.Column(db.Integer, primary_key=True, autoincrement=True)
     description = db.Column(db.String(50), nullable=True)
     invoice_id = db.Column(db.Integer, ForeignKey('invoices.id'), nullable=False)
+    invoice_number = db.Column(db.String(50), nullable=False, index=True, comment='CFS Invoice number')
 
 
 @define
@@ -53,8 +55,9 @@ class NonSufficientFundsSchema:  # pylint: disable=too-few-public-methods
     """Used to search for NSF records."""
 
     id: int
-    invoice_id: int
     description: str
+    invoice_id: int
+    invoice_number: str
 
     @classmethod
     def from_row(cls, row: NonSufficientFundsModel):
@@ -62,4 +65,5 @@ def from_row(cls, row: NonSufficientFundsModel):
 
         https://www.attrs.org/en/stable/init.html
         """
-        return cls(id=row.id, invoice_id=row.invoice_id, description=row.description)
+        return cls(id=row.id, invoice_id=row.invoice_id, invoice_number=row.invoice_number,
+                   description=row.description)
diff --git a/pay-api/src/pay_api/services/non_sufficient_funds.py b/pay-api/src/pay_api/services/non_sufficient_funds.py
index 719598fbd..9d3a3981f 100644
--- a/pay-api/src/pay_api/services/non_sufficient_funds.py
+++ b/pay-api/src/pay_api/services/non_sufficient_funds.py
@@ -53,13 +53,14 @@ def populate(value: NonSufficientFundsModel):
         return non_sufficient_funds_service
 
     @staticmethod
-    def save_non_sufficient_funds(invoice_id: int, description: str) -> NonSufficientFundsService:
+    def save_non_sufficient_funds(invoice_id: int, invoice_number: str, description: str) -> NonSufficientFundsService:
         """Create Non-Sufficient Funds record."""
         current_app.logger.debug('<save_non_sufficient_funds')
         non_sufficient_funds_service = NonSufficientFundsService()
 
-        non_sufficient_funds_service.dao.invoice_id = invoice_id
         non_sufficient_funds_service.dao.description = description
+        non_sufficient_funds_service.dao.invoice_id = invoice_id
+        non_sufficient_funds_service.dao.invoice_number = invoice_number
         non_sufficient_funds_dao = non_sufficient_funds_service.dao.save()
 
         non_sufficient_funds_service = NonSufficientFundsService.populate(non_sufficient_funds_dao)
@@ -88,6 +89,7 @@ def query_all_non_sufficient_funds_invoices(account_id: str):
                 [(PaymentLineItemModel.description == ReverseOperation.NSF.value, PaymentLineItemModel.total)],
                 else_=0)).label('total_amount'))
             .join(PaymentAccountModel, PaymentAccountModel.id == InvoiceModel.payment_account_id)
+            .outerjoin(NonSufficientFundsModel, NonSufficientFundsModel.invoice_id == InvoiceModel.id)
             .join(PaymentLineItemModel, PaymentLineItemModel.invoice_id == InvoiceModel.id)
             .filter(PaymentAccountModel.auth_account_id == account_id)
         )
@@ -111,8 +113,8 @@ def find_all_non_sufficient_funds_invoices(account_id: str):
         data = {
             'total': total,
             'invoices': new_invoices,
-            'total_amount': float(aggregate_totals.total_amount),
-            'total_amount_remaining': float(aggregate_totals.total_amount_remaining),
+            'total_amount': float(aggregate_totals.total_amount or 0),
+            'total_amount_remaining': float(aggregate_totals.total_amount_remaining or 0),
             'nsf_amount': float(aggregate_totals.nsf_amount)
         }
 
@@ -139,7 +141,7 @@ def create_non_sufficient_funds_statement_pdf(account_id: str, **kwargs):
             'totalAmount': invoice['total_amount'],
             'nsfAmount': invoice['nsf_amount'],
             'invoices': invoice['invoices'],
-            'invoiceNumber': invoice_reference.invoice_number,
+            'invoiceNumber': getattr(invoice_reference, 'invoice_number', None)
         }
 
         invoice_pdf_dict = {
diff --git a/pay-api/tests/unit/api/test_non_sufficient_funds.py b/pay-api/tests/unit/api/test_non_sufficient_funds.py
index 24a29f49d..8a82c3a64 100644
--- a/pay-api/tests/unit/api/test_non_sufficient_funds.py
+++ b/pay-api/tests/unit/api/test_non_sufficient_funds.py
@@ -29,7 +29,7 @@ def test_get_non_sufficient_funds(session, client, jwt, app):
     token = jwt.create_jwt(get_claims(), token_header)
     headers = {'Authorization': f'Bearer {token}', 'content-type': 'application/json'}
 
-    invoice_number = '10001'
+    invoice_number = 'REG00000001'
     payment_account = factory_payment_account()
     payment_account.save()
     payment = factory_payment(payment_account_id=payment_account.id, paid_amount=0, invoice_number=invoice_number)
@@ -57,7 +57,8 @@ def test_get_non_sufficient_funds(session, client, jwt, app):
 
     invoice_reference = factory_invoice_reference(invoice_id=invoice.id, invoice_number=invoice_number)
     invoice_reference.save()
-    non_sufficient_funds = factory_non_sufficient_funds(invoice_id=invoice.id, description='NSF')
+    non_sufficient_funds = factory_non_sufficient_funds(invoice_id=invoice.id, invoice_number=payment.invoice_number,
+                                                        description='NSF')
     non_sufficient_funds.save()
 
     nsf = client.get(f'/api/v1/accounts/{payment_account.auth_account_id}/nsf', headers=headers)
diff --git a/pay-api/tests/unit/models/test_non_sufficient_funds.py b/pay-api/tests/unit/models/test_non_sufficient_funds.py
index 17b10c022..8f88ce59f 100644
--- a/pay-api/tests/unit/models/test_non_sufficient_funds.py
+++ b/pay-api/tests/unit/models/test_non_sufficient_funds.py
@@ -24,14 +24,16 @@
 def test_non_sufficient_funds(session):
     """Assert Non-Sufficient Funds defaults are stored."""
     payment_account = factory_payment_account()
-    payment = factory_payment()
+    payment = factory_payment(invoice_number='REG00000001')
     payment_account.save()
     payment.save()
     invoice = factory_invoice(payment_account=payment_account)
     invoice.save()
-    non_sufficient_funds = factory_non_sufficient_funds(invoice_id=invoice.id, description='NSF')
+    non_sufficient_funds = factory_non_sufficient_funds(
+        invoice_id=invoice.id, invoice_number=payment.invoice_number, description='NSF')
     non_sufficient_funds.save()
 
     assert non_sufficient_funds.id is not None
-    assert non_sufficient_funds.invoice_id is not None
     assert non_sufficient_funds.description == 'NSF'
+    assert non_sufficient_funds.invoice_id is not None
+    assert non_sufficient_funds.invoice_number == 'REG00000001'
diff --git a/pay-api/tests/unit/services/test_non_sufficient_funds.py b/pay-api/tests/unit/services/test_non_sufficient_funds.py
index 2fc68e2ad..b7a7ac91b 100644
--- a/pay-api/tests/unit/services/test_non_sufficient_funds.py
+++ b/pay-api/tests/unit/services/test_non_sufficient_funds.py
@@ -28,12 +28,13 @@
 def test_save_non_sufficient_funds(session):
     """Test save_non_sufficient_funds."""
     payment_account = factory_payment_account()
-    payment = factory_payment()
+    payment = factory_payment(invoice_number='REG00000001')
     payment_account.save()
     payment.save()
     invoice = factory_invoice(payment_account=payment_account)
     invoice.save()
     non_sufficient_funds = NonSufficientFundsService.save_non_sufficient_funds(invoice_id=invoice.id,
+                                                                               invoice_number=payment.invoice_number,
                                                                                description='NSF')
     assert non_sufficient_funds
     assert non_sufficient_funds['description'] == 'NSF'
@@ -43,7 +44,7 @@ def test_find_all_non_sufficient_funds_invoices(session):
     """Test find_all_non_sufficient_funds_invoices."""
     payment_account = factory_payment_account()
     payment_account.save()
-    payment = factory_payment(payment_account_id=payment_account.id, paid_amount=0, invoice_number='10001',
+    payment = factory_payment(payment_account_id=payment_account.id, paid_amount=0, invoice_number='REG00000001',
                               payment_method_code='PAD')
     payment.save()
     invoice = factory_invoice(
@@ -69,7 +70,8 @@ def test_find_all_non_sufficient_funds_invoices(session):
 
     invoice_reference = factory_invoice_reference(invoice_id=invoice.id, invoice_number=payment.invoice_number)
     invoice_reference.save()
-    non_sufficient_funds = factory_non_sufficient_funds(invoice_id=invoice.id, description='NSF')
+    non_sufficient_funds = factory_non_sufficient_funds(invoice_id=invoice.id, invoice_number=payment.invoice_number,
+                                                        description='NSF')
     non_sufficient_funds.save()
 
     find_non_sufficient_funds = NonSufficientFundsService.find_all_non_sufficient_funds_invoices(
diff --git a/pay-api/tests/utilities/base_test.py b/pay-api/tests/utilities/base_test.py
index b126e00d6..1c2bee7fd 100644
--- a/pay-api/tests/utilities/base_test.py
+++ b/pay-api/tests/utilities/base_test.py
@@ -888,9 +888,9 @@ def factory_eft_shortname(short_name: str, auth_account_id: str = None):
     return EFTShortnames(short_name=short_name, auth_account_id=auth_account_id)
 
 
-def factory_non_sufficient_funds(invoice_id: int, description: str = None):
+def factory_non_sufficient_funds(invoice_id: int, invoice_number: str, description: str = None):
     """Return a Non-Sufficient Funds Model."""
-    return NonSufficientFundsModel(invoice_id=invoice_id, description=description)
+    return NonSufficientFundsModel(invoice_id=invoice_id, invoice_number=invoice_number, description=description)
 
 
 def factory_distribution_code(name: str, client: str = '111', reps_centre: str = '22222', service_line: str = '33333',
diff --git a/queue_services/payment-reconciliations/requirements.txt b/queue_services/payment-reconciliations/requirements.txt
index ee2bb3ff2..5a6e456c2 100644
--- a/queue_services/payment-reconciliations/requirements.txt
+++ b/queue_services/payment-reconciliations/requirements.txt
@@ -1,6 +1,6 @@
 -e git+https://github.com/bcgov/lear.git@30dba30463c99aaedfdcfd463213e71ba0d35b51#egg=entity_queue_common&subdirectory=queue_services/common
 -e git+https://github.com/bcgov/sbc-common-components.git@b93585ea3ac273b9e51c4dd5ddbc8190fd95da6a#egg=sbc_common_components&subdirectory=python
--e git+https://github.com/bcgov/sbc-pay.git@a598989a6de74206ab26024d037d0128919e540e#egg=pay_api&subdirectory=pay-api
+-e git+https://github.com/bcgov/sbc-pay.git@49bfe45bbf5b55187b5fc438098cd5dad80c5edb#egg=pay_api&subdirectory=pay-api
 Flask-Caching==2.0.2
 Flask-Migrate==2.7.0
 Flask-Moment==1.0.5
diff --git a/queue_services/payment-reconciliations/src/reconciliations/payment_reconciliations.py b/queue_services/payment-reconciliations/src/reconciliations/payment_reconciliations.py
index 5c5fb0ac4..856135436 100644
--- a/queue_services/payment-reconciliations/src/reconciliations/payment_reconciliations.py
+++ b/queue_services/payment-reconciliations/src/reconciliations/payment_reconciliations.py
@@ -45,6 +45,7 @@
 from pay_api.models import Receipt as ReceiptModel
 from pay_api.models import db
 from pay_api.services.cfs_service import CFSService
+from pay_api.services.non_sufficient_funds import NonSufficientFundsService
 from pay_api.services.payment_transaction import PaymentTransaction as PaymentTransactionService
 from pay_api.services.queue_publisher import publish
 from pay_api.utils.enums import (
@@ -441,23 +442,24 @@ def _process_partial_paid_invoices(inv_ref: InvoiceReferenceModel, row):
 
 def _process_failed_payments(row):
     """Handle failed payments."""
-    # 1. Set the cfs_account status as FREEZE.
-    # 2. Call cfs api to Stop further PAD on this account.
-    # 3. Reverse the invoice_reference status to ACTIVE, invoice status to SETTLEMENT_SCHED, and delete receipt.
-    # 4. Create an NSF invoice for this account.
-    # 5. Create invoice reference for the newly created NSF invoice.
-    # 6. Adjust invoice in CFS to include NSF fees.
+    # 1. Check if there is an NSF record for this account, if there isn't, proceed.
+    # 2. SET cfs_account status to FREEZE.
+    # 3. Call CFS API to stop further PAD on this account.
+    # 4. Reverse the invoice_reference status to ACTIVE, invoice status to SETTLEMENT_SCHED, and delete receipt.
+    # 5. Create an NSF invoice for this account.
+    # 6. Create invoice reference for the newly created NSF invoice.
+    # 7. Adjust invoice in CFS to include NSF fees.
     inv_number = _get_row_value(row, Column.TARGET_TXN_NO)
-    # If there is a FAILED payment record for this; it means it's a duplicate event. Ignore it.
-    payment: PaymentModel = PaymentModel.find_payment_by_invoice_number_and_status(
-        inv_number, PaymentStatus.FAILED.value
-    )
-    if payment:
-        logger.info('Ignoring duplicate NSF message for invoice : %s ', inv_number)
+    payment_account: PaymentAccountModel = _get_payment_account(row)
+
+    # If there is an NSF invoice with a remaining nsf_amount balance, it means it's a duplicate NSF event. Ignore it.
+    non_sufficient_funds = NonSufficientFundsService.find_all_non_sufficient_funds_invoices(
+        account_id=payment_account.auth_account_id)
+    if non_sufficient_funds['nsf_amount'] > 0:
+        logger.info('Ignoring duplicate NSF event for account: %s ', payment_account.auth_account_id)
         return False
 
     # Set CFS Account Status.
-    payment_account: PaymentAccountModel = _get_payment_account(row)
     cfs_account: CfsAccountModel = CfsAccountModel.find_effective_by_account_id(payment_account.id)
     is_already_frozen = cfs_account.status == CfsAccountStatus.FREEZE.value
     logger.info('setting payment account id : %s status as FREEZE', payment_account.id)
@@ -734,6 +736,10 @@ def _create_nsf_invoice(cfs_account: CfsAccountModel, inv_number: str,
         created_by='SYSTEM'
     )
     invoice = invoice.save()
+
+    NonSufficientFundsService.save_non_sufficient_funds(invoice_id=invoice.id, invoice_number=inv_number,
+                                                        description='NSF')
+
     distribution: DistributionCodeModel = DistributionCodeModel.find_by_active_for_fee_schedule(
         fee_schedule.fee_schedule_id)