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With payment fraud on the rise, new and changing threats emerge every day. Recently, a produce distributor received a notice of check fraud activity for the third time. The alert was especially surprising to the Chief Financial Officer after adding security measures to help make check payments “bullet proof.”
The first problem was sheer volume -- between paying bills and distributing paychecks, the company was issuing more than 2,000 checks a month. The accounting team’s approach was to manually approve the thousands of checks each month.
“They had a secure office that required badges to unlock every door, but company executives didn’t realize that their check payments weren’t nearly as secure,” said Brandon Citrin, Vice President and Treasury Management Officer. “They spent a lot of time and effort doing a manual security check process that wasn’t foolproof.”
Check fraud continues to be the #1 type of fraudulent payment activity. According to the 2017 AFP Payments Fraud and Control Survey, 75 percent of organizations experienced check fraud, an increase from 71 percent in the previous year. In addition, 74 percent reported that their organizations were exposed to business email compromise. Highly sophisticated email phishing tactics may have infiltrated the accounts payable workflow to fuel the increase in check fraud.
That’s where Brandon and his team come in to help stem the tide of fraudulent activity’s impact on your bottom line.
“My job is to help companies by recommending efficient fraud-fighting tools like Positive Pay. It was an easy fix for the produce firm because it used technology for check approvals to save time and prevent fraud.”
How does Positive Pay work? It essentially adds a high level of security to minimize financial and legal consequences. The tool helps stop counterfeit or unauthorized check payments from being processed by matching the checks presented for payment to a specific pre-approved list.
While the produce distributor was reluctant to break away from the traditional manual cross-check verification process, the CFO found that ushering in Positive Pay was major step toward providing a strong technological shield.
“The company had adopted a scanner to detect if produce like a pear was organic or non-organic,” Citrin said. “But they didn’t have a system to ensure a check was valid or invalid. Positive Pay acts in a similar way by separating real checks from imposters.”
With Positive Pay, your checks are reconciled against a file of approved checks issued by your company issues each day. Those presented for payment are verified against the list — and only the checks listed will be paid. The bank also notifies you of unauthorized checks such as those that are stale dated or appear to be forged or altered. As a result, you can identify and stop unauthorized transactions, including counterfeit or altered checks, before final payment.
Along with the security of sorting the good from the bad, Positive Pay adds benefits that provide a streamline process:
You have the ability to decide whether to pay or return checks flagged as exceptions — meaning that checks presented that do not match your issued check file will come to your immediate attention. This is your company funds’ best defense against counterfeiting.
“Positive Pay is a solid way to help protect your business,” Citrin said. “It’s like riding a motorcycle and not protecting yourself. It’s not a matter of ‘if’ you’re going to have a problem. It’s when.”
Businesses of all sizes are susceptible to payment fraud. You may not be able to prevent every threat, but you can avoid or limit losses from fraud by using a fraud detection and control system like Positive Pay.
Stay one step ahead of the threats. Get more information on tips, tactics and tools for fighting fraud. View our payment fraud infographic for more ways to help safeguard your business and company accounts.[cite::171::cite] [cite::172::cite]