How to Prevent Check Fraud
Positive pay is a check fraud detection service that allows you to take control of items clearing through your business checking account…
According to a survey issued by the Association for Financial Professionals, 70% of organizations were victims of attempted or actual check fraud in 2018. The crime of check fraud poses a great challenge for both businesses and financial institutions. An incident of check fraud can have costly, and sometimes devastating effects on a business.
Utilizing the positive pay service offered by most financial institutions is a strong defense against check fraud and can add another level to internal security procedures you already have in place at your organization.
So, what is positive pay and how does it work? Often combined with reconciliation services, positive pay is a check fraud detection service that allows you to take control of items clearing through your business checking account. A file is sent to your bank each time checks are issued by your organization. The file contains payment information including check number, payee, issue amount, and check date. When a check is presented to your financial institution, it is compared against the information contained in the files received to ensure there is a match. If no match exists, you are notified and have the opportunity to reject any unauthorized payments before incurring the charge against your account.
You can check with your financial institution as to the availability of this service and their related costs. This will help to determine if this may be something you want to add as an additional form of insurance and control in your organization, against fraud losses.
Another fraud deterrent, at least as it relates to your payroll, may be to consider direct deposit. There are many benefits to paying your employees via direct deposit versus live checks. These benefits include time savings of reissuing lost checks, less time to reconcile, and of course the reduced fraud risk.
Occurrences of fraud are not likely to decrease in the coming years. Now may be the time to consider how best to mitigate it in your organization. We produce positive pay files for the payroll checks issued by a number of our clients that already utilize the positive pay service offered by their banks.
Have questions on how to prevent check fraud? Contact us for more information.
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