If something bounces, then I will handle it within 24h. Again, this is the setup that covers my needs. A different organizations with different needs should have different process/controls to match their liquidity/easy-to-access-cash needs.
You probably want this as a generic fail safe for any account that you disclose the account an routing number to an outside entity.
I'm not an expert on this, but I believe there are ways to set up business accounts where money can't be taken out in that way, at least not by the standard electronic means. You can also manage accounts in such a way as that there's no money to take out, although that does not necessarily prevent the account from going into the negative. Checking accounts can go into significant negative balances if the bank chooses to allow it.
As to prevent the overdraft, just ask the bank to NOT have overdraft capacity on your account(s).
Edit: I'm replying to a really low odds scenario, where:
1. You auto sweep all money out of paypal
2. You regularly empty the checking account it sends to
You have at risk maybe $1000-$2000 in the chequing + less than $100 in fees.
For something vanishingly unlikely to happen. The risk seems rather low compared to the exposure.
I mostly use stripe and have PayPal as a backup. Never had a problem with either, and if I did have a problem with one the amounts are fairly low. (Probably more of an amount risk with stripe as they take longer to sweep out the money. But I don't think they freeze as often)
This speaks about keeping 7 accounts: https://m.youtube.com/watch?v=auzLhKvsxnQ
There is a Tom Ferry (real estate guy but has some sound tips) also has on a video a VERY good flow diagram on how to distribute money in different buckets/accounts. Apologies but I couldn't find it on my phone.
I was "inspired" by the above and once I organized my accounts/flows and stopped using "single account for all" my life became so much simpler. And of course PayPal wallet is not a permanent parking space for £€¥$.
It is an interesting angle to try a civil suit for.
Overdraft is a loan. Would you get a loan with insane interest rate and fees just to get a payment go through? Not me.