If you can’t answer “yes” to the question: “Are you using Positive Pay?” you may be unintentionally putting your company at risk. Fraudsters can easily obtain blank check stock from an online vendor or your local office supply store and forge vendor checks. Your bank doesn’t know all your vendors and these checks are often easily cashed without any questions being asked.
Depending on the size and complexity of your organization, this fraud may not be found until the bank reconciliations are done. This gives the fraudster plenty of time to cash several checks and disappear.
Most state laws limit your liability if you report the fraud crime within 48 hours. That is great if you are doing daily reconciliations of your account. If you are not able to notify the bank within 48 hours, you bear the liability of the fraud…and that could be huge.
Positive Pay allows a company and its financial institution to work together to detect check fraud by identifying items presented for payment that the company did not issue. In the usual case, the company transmits electronically to the financial institution a list of all checks it issued on a particular day (check issue file). The financial institution verifies checks received for payment against that list and pays only those on the list. The financial institution rejects:
• Checks not on the company’s list.
• Checks that exceed a specific dollar amount.
• Checks that carry dates long past due (stale checks).
The financial institution investigates rejected checks to find out if the items are fraudulent or in error. The financial institution pays only exception items approved by the company. Positive Pay allows only previously authorized checks to post to your checking account. Many banks also offer “Payee Positive Pay” as a premium service that includes all of the traditional positive pay features plus a review of the payee name.
The risk of not using Positive Pay outweighs the hassle of having to tell the bank simple details of the checks you write. Two of those risks include the theft of your entire company bank account and the bad reputation of bouncing checks.
Positive Pay should be thought of like any other insurance policy the company has. There is a premium to pay to mitigate the risk. Disputing fraudulent items is a huge hassle for all involved and time consuming dealing with law enforcement to file fraud claims. Most clients tell their banker "I've never had fraud so I don't need Positive Pay." That is like saying "My house has never burned to the ground, so I don't need fire insurance."
An organization can’t afford to not use Positive Pay. A known risk that could affect cash flow needs to be addressed to prevent a negative impact on the organization. Those negative impacts include theft of cash and lack of the ability to continue to function in a positive cash flow scenario.
Fraud has come a long way and branched out into many different kinds and so we have to do whatever it takes to avoid getting victimized. ID theft is not only possible through dumpster diving or stealing information from unknowing citizens. Keep your files, both paper and those saved in your computer hard drive, safe against fraudulent people out to get your personal information and use it to their advantage.
Posted by: Texas shredding | August 08, 2011 at 08:47 AM
It may not be advisable to bring cash all the time as we are not certain what might happen but it is also not good to solely depend on credit cards and checks for transactions. There are so many ways to combat fraud most especially identity theft, and what we need to determine is which one best suits us. Altering purchasing or banking habits can also be helpful as well as keeping all personal documents private.
Posted by: shredding Austin | November 22, 2011 at 05:01 AM