Payee Positive Pay

- Your Company's Solution to Check Fraud Protection

Driven by growing check fraud, banks and businesses are protecting themselves and are promoting a technique called Payee Positive Pay as a method of fighting check fraud artists.
 

 The average fraud scheme lasts 18 months before it is detected.

 2% imprisonment rate for check fraud.

 Small businesses are the most vulnerable to fraud and abuse. The average scheme in a small business causes $127,500 in losses. The average scheme in the largest companies costs $97,000.

Recent Secret Service investigations indicate that there has been an increase in ... counterfeiting of corporate checks and other negotiable instruments ... created with the use of computer technology.

Revised UCC regulations add the burden of shared responsibility for check fraud on the business. For example, if a bank offers their customer check stock that contains security features that could have prevented a specific case of fraud, the bank can claim that the customer was negligent and therefore at least partially liable for the fraud loss.

 

Positive Pay is an automated fraud detection tool offered by the Cash Management Department of most banks. In its simplest form, it is a service that matches the account number, check number and dollar amount of each check presented for payment against a list of checks previously authorized and issued by the company. All three components of the check must match exactly or it will not pay.  Sometimes the payee name is included, but is not part of the matching service; although we highly recommend that it becomes part of the service. Ask your bank if they include Payee name in Positive Pay.
 

Positive Pay requires the company to send (transmit) a file of issued checks to the bank each day checks are written. When those issued checks are presented for payment at the bank, they are compared electronically against the list of transmitted checks. The check-issue file sent to the bank contains the check number, account number, issue date, dollar amount, and optionally, payee name.

When a check is presented that does not have a "match" in the file, it becomes an "exception item". The bank sends a fax or an image of the exception item to the client. The client reviews the image and instructs the bank to pay or return the check.

There is generally a fee charged by the bank for Payee Positive Pay, although some banks now offer the service of Positive Pay for free. The fee might well be considered an "insurance premium" to help avoid check fraud losses and liability.

Payee Positive Pay is an effective and practical automated business solution that simplifies your day-to-day operations by helping you guard against check fraud. You’re protected daily against losses due to fraudulent check payments and the cashing of unauthorized checks that are presented over-the-counter.

Payee Positive Pay is one of the measures identified by the Uniform Code Council, through which businesses can avoid or reduce their liability if a fraud attempt is successful.

Check fraud prevention starts with a Payee Positive Pay partnership with your bank. The Payee Positive Pay process is simple, but many businesses struggle in trying to create a file that meets their bank's requirements. JustinTime Payee Positive Pay software makes implementing this process easy.

How It Works: Using Sage 100 Contractor and JustinTime Payee Positive Pay software, a company regularly sends to its bank a Payee Positive Pay file that lists all checks, since last transmission, written against that company’s account(s).

  That file includes a record of each check’s issued date, amount, check number/account and payee name.

  When a check reaches the bank for payment, the bank compares the check against the positive pay file. Any discrepancies in a check’s information will trigger a flag that the check in question may have been altered.

  The bank notifies its corporate customer that the discrepancy has been noted and asks the  company to verify the authenticity of that check.

 As more banks require Payee Positive Pay to stem the rising tide of check fraud resulting from alterations to payee information, JustinTime Payee Positive Pay for Sage 100 Contractor is the solution.