Businesses of all sizes know that there are risks associated with money management, and just a single slipup can come with a hefty price tag. Companies can easily become exposed to fraud when proper precautions aren’t taken, and the aftermath of falling victim to even attempted fraud can be dizzying at best, if not downright disastrous.

Fraud is a big business – according to the American Bankers Association, attempted check fraud surpassed $15 billion in 2018, a figure that nearly doubled in just two years. Understanding the risks of fraud is only half the battle, and businesses should be proactive, rather than reactive when implementing anti-fraud protections and mitigation tactics into daily operations.

The good news is that many types of fraud like email-based ransomware and phishing can be mitigated by low-effort measures like inbox vigilance and proper employee training, and higher-strength protections can be put in place by implementing Positive Pay, a fraud protection service offered and used by many banks, which can be considered an automated second set of eyes that monitors checks and payments and flags things that may cause concern.

So, how exactly does Positive Pay work, and why should you implement it?

How it works

Think of Positive Pay, which can be used for digital ACH payments and paper checks, as a two-step verification process for outbound payments, where the bank runs checks against a list of statements provided by a financial controller, accountant, or other authorized staff to match the check numbers, account numbers, and dollar amounts. If the information does not line up, the check is flagged for review, and can ultimately be approved or denied by an authorized reviewer. Similarly, wire transfers and paperless payments can be reviewed against a list of approved payments, and suspicious payments over a defined threshold can be flagged.

You can send your bank a file of authorized outbound checks, and if a check is presented to the bank that was not listed in this file, the bank will take notice. Banks will generate a report – called an exception report – of flagged checks or checks that were not presented on a file provided by your accounting team, which then must be reviewed, and an authorized reviewer will be notified to verify or deny these flagged payments over email, a phone call, or sometimes both.

Similarly, those with bank access privileges can set up rules—for example, accepted thresholds for ACH payment amounts. Say your payroll amounts to about $35,000 every month. By setting up a threshold maximum of $45,000, payroll will be automatically authorized and sent out monthly so long as payments never exceed $45,000. This maximum amount leaves wiggle room for pay raises and bonuses, but if payroll exceeds that amount the account holder will be notified and will have to review and approve the payment.

Quick detection of errors can help reduce loss and company downtime, while providing a sense of relief that there are added layers of protection to outbound checks and payments. Double-checking outbound payments is an easy, yet effective practice that can strengthen your financial security.

Using Positive Pay features in Business Central

Dynamics 365 Business Central has built-in Positive Pay features that allow users to generate a file that can be exported and shared with banking services to cross reference with exception reports, simplifying the process of clearing reviews and transactions. The file contains vendor information, check number, and payment amount, giving the bank a verified list of approved transactions from your business, making it easier to discover discrepancies within the exception report.

Business Central is preconfigured to support Positive Pay files for Bank of America and Citi Bank, but the generated file can be used anywhere once you’ve set up Positive Pay with your banker. It’s easy to set up the Positive Pay feature in Business Central, and your bank can have you up and running with these added protections in no time.

Why you should take advantage of Positive Pay

Fraud controls work – and although Positive Pay services through your bank usually come at a fee, adding another layer of protection to financial records and transactions is invaluable. Truly, it is better to be safe rather than sorry. We highly recommend businesses of all sizes look into their options and implement Positive Pay protections before disaster strikes.

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You don’t have to be a security expert to keep your business and financial operations safe. Microsoft business apps are designed with security at the forefront, so you can have peace of mind without adding strenuous steps to business processes.  If you’re looking for a proactive partner, get in touch with us. Our security team will help you invest in the security, success, and financial wellbeing of your business.