Protecting your business against fraud Featured

6:44am EDT November 1, 2005
Warnings about identity theft and tips to protect your personal bank accounts are touted everywhere, but little fuss is made about business owners protecting their accounts against fraudulent activity. Thanks to a variety of bank services and technology, you have some options today to protect your business.

Paper checks
Despite the increasing popularity of electronic payments, nearly 60 percent of all business-to-business payments today are made via a paper check. Here are some ways to ensure your checks are secure.

  • Use checks that are imbedded with watermarks and microprinting. These features deter fraud by making reproductions more difficult.

  • Use checks made of heat-sensitive ink and paper, which are more difficult to reproduce using basic photocopying equipment.

  • Use electronic bank account statements if available. Paper bank account statements put you at greater risk by making sensitive information accessible through the mail.

  • Keep track of your checks. It may seem obvious, but one of the best ways to protect your business from fraud is to keep track of where your physical checks are at all times. Don’t leave checks sitting out for others to steal.

  • Add a positive pay or payee positive pay service to your business accounts — two add-on services available through most banks. For a nominal charge, any checks processed through your corporate checking accounts will be carefully scrutinized.

A positive pay service starts with you sending a list to your bank of all checks issued. The bank matches the check number, dollar amount and account numbers of all inbound checks against your list.

Any checks that do not match your list are flagged for review. With most positive pay services, you can go online to review images of your checks that are flagged as exception items. You reduce disbursement risk by easily reviewing suspect items and alerting the bank whether to pay or to return.

With payee positive pay, when providing your bank the check number and dollar amount of checks issued, you also include the payee. Again, you may review exception items online and alert the bank to pay or to return the check.

Electronic payments
Technology is helping businesses secure their payables and receivables when electronic payment formats are being used.

  • Automated clearinghouse payments (ACH). It is cost effective for suppliers and customers to pay via ACH. However, you must provide your bank account information before an electronic payment can be initiated.

While necessary, it puts your accounts at risk. With a Universal Payment Identification Code (UPIC), you can receive electronic payments without disclosing confidential bank information.

Your UPIC number serves as a universal remittance number and masks your real account numbers. UPIC technology also limits account activity to credit payments and blocks all debits. If you should move your accounts, the UPIC number remains the same.

  • Credit card payments. To protect credit card payments, both Visa and MasterCard have implemented universal precautions for businesses that accept credit card payments.

The standards require companies to follow certain procedures when handling cardholder data and include a number of criteria, such as quarterly network scans and audits by qualified independent security assessors to ensure merchants and service providers protect cardholder data.

  • Purchasing cards. New technology is now available to enhance controls on purchases made by employees with purchasing cards. This technology enables your organization to instantly manage the available credit on individual purchasing cards.

Technology advances also let you to limit purchasing activity through an array of card-spending controls, including monthly and per-transaction limits, as well as merchant spend categories that only permit use of the card with certain merchants. Some card programs provide online access to manage these parameters directly from your desktop computer.

This was prepared for general information purposes only and is not intended as specific advice or recommendations. Any reliance upon this information is solely and exclusively at your own risk.

Benjamin Willingham is sales manager for corporate banking in Ohio at PNC Bank, National Association, member of The PNC Financial Services Group Inc. Reach him at (512) 651-7558.