Treasury Software - Positive Pay Challenges and Solutions

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Positive Pay: Challenges & Solutions
Reducing the Risk of Check Fraud

Check fraud has more than doubled in recent years. It has been estimated that the costs of check fraud to U.S. companies, merchants and financial institutions is over $20 billion annually. Increased access to identity information coupled with advances in printing technology make it easier than ever to create fraudulent checks.

The Federal Trade Commission reports that check fraud victims spend over 175 hours filling out insurance claims, police reports, affidavits and other tasks in an attempt to pursue prosecution and recover losses. In addition to the time and costs associated with addressing fraud, the American Bankers Association estimates that the cost of the fraud itself often exceeds $3,000.

The Uniform Commercial Code (UCC) places the burden of check fraud on the party most negligent in preventing it. Business clients are required to take reasonable precautions against fraud, and to notify their bank of potential fraud in a timely manner.

Positive Pay is a treasury management service offered by most financial institutions that allows business clients to approve or reject questionable items, providing protection against altered or fraudulent checks. Here's how it works:

1. A company sends its bank a positive pay file listing all checks written against that company's accounts.
2. When a check is presented for payment at the bank, the bank compares the check against the positive pay file. Any discrepancies prompt an alert that the check may have been altered.
3. The bank notifies its business client of the discrepancy and seeks verification of the check's authenticity.

While most large businesses participate in positive pay programs, participation is low among small to mid sized businesses which represent 90 percent of the corporate marketplace. Whereas large corporate clients have the financial and technological resources to create custom solutions that integrate their accounting systems with the unique positive pay requirements of their bank, this process is cost prohibitive for most small to mid size business clients. Promoting participation in banks' positive pay service is especially challenging because there is a lack of industry standardization in terms of file transmission requirements.

Treasury Software's Bank Positive Pay™ provides businesses of all sizes a secure, easy, cost-effective solution to participate in their bank's positive pay program. Compatible with all banks and all major accounting packages, this solution automates the process of creating and transmitting issue files directly from the client to the bank - in the bank's unique format- and includes advanced security features that offer the highest level of protection for electronic file transmission.

Treasury Software develops a range of cash management solutions for business including positive pay, ACH, BAI, bank reconciliation, and credit card reconciliation. Designated a Verified for Windows XP software application by Microsoft, Treasury Software is a Microsoft Certified Partner and Winner of the Gold Cup Award from CPA Software News. For more information: www.TreasurySoftware.com or 866-226-5732.