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Help protect your business against payment fraud

Home BlogHelp protect your business against payment fraud

Key takeaways:

  • All businesses are at risk for payment fraud.
  • There are tools available that can help you prevent payment fraud or catch it in the very early stages.
  • By utilizing bank services such as Positive Pay on ACH transactions, you can help shield your business’ bottom line.

The Association for Financial Professionals’ 2018 survey showed that nearly 78 percent of executives had encountered some form of payment fraud.

Payment fraud typically occurs when a third party manipulates information to receive payment instead of the intended party. It can also occur when the intended party increases the payment amount without the payer’s notice. For example, when your business sends payment to a vendor and that vendor changes the amount without notifying you, it is considered payment fraud.

With payment fraud targeting businesses of all sizes, it’s important to consider that payment fraud can happen regardless of your company’s industry and specialty. Thankfully, there are several ways to help prevent this sort of fraud.

Utilize Positive Pay

Positive Pay is a monitoring tool focused on safeguarding businesses against check fraud. The service provides daily protection against losses due to fraudulent payments.

The system is a simple one to use. When you issue a batch of checks through your accounting program, the date, amount, payee and account number are noted. Those records are exported from your accounting system and imported into the Positive Pay system. As the checks are deposited, Positive Pay analyzes the details of the check against the details you provided when it was issued. Any discrepancies are flagged and then you can decide if the checks should be paid or returned.

This early detection of suspicious activity helps reduce your business’ financial losses and safeguards your company’s reputation. Additionally, Positive Pay reinforces your audit trail and simplifies account reconciliation.

Enable Positive Pay on ACH transactions

Similarly, Positive Pay can help reduce fraudulent ACH transactions. All you have to do is provide guidelines for monitoring ACH activity. Any transactions that don’t meet your preset guidelines are flagged for your approval before being posted to your account.

Quick exception processing makes it convenient to examine any payments that were flagged as suspicious. All you have to do is review the information including the date, amount and payee. Then you can decide to “pay” or “return.” For any return, that amount of money will go back to your business’ bank account.

ACH transactions often involve larger sums than checks, so the Positive Pay utilizations can provide even more value to your business’ bottom line.

Use real-time alerts

At many banks, you can choose to receive real-time alerts via your email, SMS and/or push notifications. Opt-in for these alerts when possible. The sooner you’re aware of a possible payment fraud situation, the faster you can handle the situation and mitigate the situation.

With peace of mind, you can feel empowered to focus on running your business rather than worry about a third party or someone you’re paying taking advantage of you and your business. For more information about Positive Pay, stop in to see us at any of our locations.

MidWestOne Bank does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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