Whether it’s digital fraud, phishing and spoofing, or check and payments fraud, the reality is that many businesses (71%, according to a 2022 AFP Payments Fraud and Control Survey) unfortunately experience fraudulent schemes or attempts that can cost them time and money. The survey also found that the most common scheme (66%) currently impacting businesses is check fraud. While electronic payments have become increasingly common, ceasing to use or accept checks isn’t an option as many businesses and vendors prefer this payment method.
Therefore, it’s important to take proactive precautions to not only protect yourself against check fraud, but to prevent it as well. Here are ways companies can protect themselves from check fraud.
Implement Effective Internal Controls
Ensuring you have effective internal controls in place is an important step to protect your business from check fraud. First, it’s important to educate your employees about fraud prevention. As a business owner, it is impossible to do every task yourself so your employees must know what fraudulent activity can look like to help them catch it quickly.
Apart from educating employees, there are many practices you can implement to protect your business proactively, such as creating separate accounts for different activities; reviewing account activity daily; ensuring that check inventory is secured when not in use and keeping outgoing checks in a safe place; and segregating duties so one person isn’t in charge of balancing all your books and issuing checks.
Solutions to Consider
There are also numerous solutions that can help protect your business against check fraud and remove human error. Some banks offer services to protect your payables to ensure that no checks are written on behalf of your business without your consent. Products like check positive pay work by notifying businesses of checks presented that do not match the issue information. Businesses can even go a step further and implement payee positive pay, which provides businesses with the ability to detect fraud before it hits their account by matching the payee name on each check, the dollar amount, the check number and the account number that is presented for payment against checks previously authorized and issued by you. If these components don’t match, then the check will not go through.
Re-evaluate Your Banking Partner
Your banking partner is one of your best resources in helping protect your business against fraud and addressing it if your business falls victim. Therefore, it’s important to have a strong relationship with your bank and trust that they have your best interest in mind. Your bank should not only offer anti-fraud monitoring systems and fraud prevention services, but also stay abreast of the latest tools and technologies that can help secure your business and make proactive recommendations. Lastly, your banking partner should be easily accessible if fraud does occur if you see suspicious activity on your account or if you have a question.
With fraud schemes evolving at a rapid pace, it’s important that business owners continue to educate themselves and their employees on ways to protect themselves and the business. The right banking partner can help not only inform your fraud protection plan, but also inform your employee education and keep you abreast of the type of schemes they are seeing.
While many businesses can’t stop accepting or issuing checks to protect their business, there are other proactive steps they can take to ensure they are handling checks in the safest manner possible. It is never too late to improve your processes and your organization’s defenses against fraud.
Helping you boost your financial intelligence.
Read our financial resources from your friends at WSFS.