by Joseph M. Delisi, CPA, Principal
Despite the continuing decline in overall paper check usage, check fraud continues to pose a risk for many organizations. Since checks are passed person-to-person on their way to payment, they can easily be stolen, duplicated, altered or cashed illegally.
Are you concerned about check fraud losses at your business? Positive Pay may be the solution for you. It is essentially an insurance policy against unauthorized disbursements from your bank account. It is a service offered by banks for a fee, although some banks are now offering this service at no cost.
Here’s how it works: Positive Pay requires a company to transmit to the bank a file of checks issued each time checks are written. The file submitted to the bank contains the check number, date, amount, and bank account number. When those checks are presented to the bank for payment, they are compared electronically against the list of transmitted checks.
When a check presented for payment does not match the information on the file transmitted to the bank, it becomes an exception item. Before the bank processes the check for payment, it sends an image of the exception item to the client. The client then reviews the image, and instructs the bank to either process the check for payment, or return the check as unpaid. This allows the company to identify fraudulent checks before they are paid by the bank.
Positive Pay is an effective way to institute check fraud protection, stop bad payments, and reduce liability when dealing with a large volume of checks.
H2R CPA is pleased to assist clients in finding ways to protect themselves against fraud. Contact our team at 412-391-2920 or firstname.lastname@example.org for more information. We would be pleased to provide a complimentary consultation.
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