The most serious threats are check tampering, forged checks, and other fraud activities. Banks and other financial institutions are particularly vulnerable to these losses, so having tools in place to protect your business is critical. Bank reconciliation and positive pay can help prevent fraudulent or forged checks from entering your account to some extent. Keep reading to know more about these features and about a great platform that provides both bank reconciliation and positive payment along with other tools for managing your business.
Check Fraud
Simply put, check fraud is the illegal use of paper or digital checks to obtain money. This can include writing a fraudulent check on their own account, forging a check in someone else’s name, or creating a completely fictitious check. However, it can also include a plethora of other types of check fraud. Check fraud may be committed by your customers, or they may become victims of a fake check scam. Some of the most common types of fraud are:
Paperhanging — when someone writes bad checks on purpose from their own account.
Check Kiting — when a person writes bad checks from their own bank account and deposits them in a different financial institution.
Check Floating — when someone writes a bank check to another person but does not have enough money in their account. This is done to capitalize on the few days the bank holds the check before depositing it.
Check Forgery — when someone impersonates an account holder in order to create a fraudulent check.
Check Theft — when someone uses a check that was stolen from someone else.
Identity Check Theft — when a person opens a bank account in another person’s name and uses it to take money.
Chemical Alteration — when a fraudster uses chemicals to remove the ink from a check so they can rewrite it.
Counterfeiting — a counterfeit check scam occurs when a thief creates checks using another person’s checking account information.
Synthetic Checks — when a criminal takes a known routing and account number, but use different payer info from the top left of the check.
Money Order Fraud — when a fraudster persuades the victim to hand over a check in exchange for a forged money order.
What Is Bank Reconciliation?
To ensure that every transaction has been properly accounted for and recorded, compare your business’s bank account statement to its accounting records for the same time period. The bank reconciliation process compares transactions between accounting records and bank statements to find and resolve any irregularities and ensure that all transactions are properly recorded throughout all records. As part of the monthly reconciliation process, a basic accounting procedure is performed each month. Bank reconciliations are a critical internal control tool for detecting and preventing fraud. The bank reconciliation ensures that all transactions processed through bank statements have been reviewed and checked, reducing the possibility of errors in the data used to prepare accounts. Use OnlineCheckWriter.com – Powered by Zil Money and automatically get all your bank reconciliations for every bank account that you own on one platform.
Positive Pay and How It Helps from Forged Checks
Banks use positive pay, as an automated cash-management service, to reduce the risk of check fraud. The positive pay system is used by financial institutions to validate business checks presented for payment. Any suspicious check is returned to the issuer for examination. This system serves as insurance for a business in the event of fraud, losses, or other liabilities to the bank.
To prevent forgeries, the service compares each check’s check number, dollar amount, and account number to a company list. The payee is mentioned on some checklists. For the bank to clear the check, these must match.
When the information doesn’t match the check, the bank sends the customer an exception report and holds payment until the company accepts it. The bank can flag the check, notify the company, and request clearance.
Prevent Check Fraud with Positive Pay and Blank Check Stock
Positive pay is used for every check presented for payment, making it the best check fraud defense for the bank. Positive Pay compares company checks to those presented for payment on your account. During the checking process, banks report inconsistencies to the issuer.
When used with printing checks on check stock paper, Positive Pay makes it much less likely that your business will be a victim of check forgery or other types of payment fraud or forged checks.
Positive Pay enables your business to stay one step ahead of criminals while safeguarding its cash flow. Putting strategies in place now to ensure future protection leaves less room for error. Positive pay cannot completely eliminate fraud, but it can significantly reduce risk and keep your finances safe.
Forged checks are not going anywhere, Fraudsters will continue to use check fraud as a major way to take advantage of people and businesses. Using high-tech solutions like bank reconciliation, positive pay, and other such methods can help banks and other financial institutions cut the costs of fraud and identity theft. Manage all your bank accounts using OnlineCheckWriter.com in one place, with all facilities from positive pay to bank reconciliation to other useful features.
