Monthly Archives: April 2017

Who’s Got My Money?

One would think today that the era of check fraud is well past us, we’d be wrong.  Organizations are still using checks – a lot, in fact nearly a billion checks are processed every year by Canadian financial institutions.  A 2015 Association of Finance Professional Fraud and Controls survey found that 62% of respondent organizations experienced attempted or actual payments fraud, of which 77% were attributed to check fraud.

The advent of Electronic Fund Transfer (EFT) and other electronic payment methods was going to dramatically reduce the use of checks in business transactions, but they haven’t.  In fact between 2011 and 2014 the Canadian Payments Association (CPA) noted that check transactions actually grew by about 2.5% on average each year.  Although the number of checks written each year continues to decline, the value of checks written continues to grow.

That decline doesn’t tell the whole story, printing checks, mailing them, depositing and processing them makes this form of payment expensive and unproductive.  The check replacement process for lost checks is time consuming and slow.  Should a check be intercepted somewhere in the delivery process, the risk of fraud exposes even more issues with replacement and the time required to facilitate.

Businesses might believe that there are no costs associated with check fraud but they’d be wrong.  Although banks typically provide insurance coverage, not all circumstances are covered and funds many not immediately be returned to you.

How can we improve our processes and mitigate this risk?  Two immediate options come to mind, introduce Electronic Fund Transfer (EFT) to your organization as a substitute to check issuance and institute a “Positive Pay” policy to better control those checks that you still issue.  EFT will not only reduce fraud risk, it will also improve efficiencies in payment processing.  Positive Pay provides an electronic matching facility that allows the bank to compare key check fields (Payee Name, Check Number, Amount) to checks presented for payment.  Transactions that don’t match are automatically routed back for review and approval.

Diligence is a necessity if you want to ensure that your organization faces the least amount of risk where fraud is concerned.  Opportunities for fraud change and evolve constantly, continue to review your corporate polices and stay abreast of the latest trends in fraud management.

Written by: Dan O’Toole

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