Positive Pay

What is Positive Pay?

Positive Pay is a widely-known cash management service used by most banks to detect fraud.  The automated tool is monitored by the cash management department and acts as a form of insurance for a business against losses, fraud and similar liabilities. 

Positive Pay works by matching the dollar amount of each check, the check number and the account number that is presented for payment against checks that have been previously authorized and issued by the business.  If these three components do not match up, the checks is not paid.  This is also used with ACH payments.  ACH transactions are reviewed to determine if the payment should be allowed to post to the account or to reject it and have it return to your business. 

As a business owner, you want to eliminate the risk of losing money due to fraudulent activities on your accounts.  Positive Pay can help you achieve this goal.   

What is the Cash Management Department? 

In banking, cash management refers to certain cash flow-related services typically offered to business customers.  Companies have a wide range of services available to them across the financial marketplace that are designed to meet their unique cash management needs. 

The Cash Management Department of a bank provides various cash management solutions to help these businesses acquire the best return on cash assets and use their cash in the most effective way possible. 

While a Cash Management Department has many responsibilities, its primary objective is to safely and accurately manage daily cash flows.  One way to ensure that cash is being properly managed and does not fall into the wrong hands is with Positive Pay. 

Facets of Positive Pay

Without security checks like Positive Pay, a company's funds are put at risk due to fraudsters and identity thieves who can create counterfeit checks.  The Positive Pay service ensures that if the check doesn't match the correct identifying information that the bank has been given, the check will not be honored. 

If a check does not match the account number on the check, the dollar amount and the check number, the bank has the option to flag the check, notify the business representative from your company and seek permission to clear the check if it turns out to be valid.  In some instances, the payee name is included in the system, but the name isn't typically part of the check matching service. 

While Positive Pay usually comes at a fee for businesses, most companies find the tool well worth the investment to protect against check fraud and financial losses.   

 Daily Transmission of Files
The Positive Pay system is simple to use once you understand how it works.  As your business issues checks, you will need to transmit a list to the bank containing check numbers, issue dates and dollar amounts of the checks.  Each bank has a unique format of requirements when it comes to transmitting files, so be sure to check with your bank. 

Exception Items

When a check is presented to a bank that doesn't have a "match" in the transmitted file, it becomes what is known  as an "exception item."  When an exception item is found, the bank will contact the business representative, who will then review and instruct the bank to either accept or deny the check presented. 

Each day, the business representative is sent any check(s) that have come back as suspicious.  The company then has the ability to give its decision to the bank the same day.  By catching unauthorized checks before they have the chance to clear in your account.  With the use of Positive Pay this can help companies save hundreds, thousands or even more in financial losses due to fraud.   

Learn More from a Magnolia State Bank Professional 

If you run any type business, you need to protect your livelihood against fraud.  Positive Pay is an important tool for companies in all industries who are at risk for identity theft, scams and schemes.  Positive Pay provides businesses with opportunity to significantly reduce their exposure to fraud by identifying unauthorized transactions like altered and counterfeit before they have a chance to post.  The service is easy to use and can even save your business time and money. 

If you want to protect your business and maintain peace of mind, consider Positive Pay software.  For More information about Positive Pay or to sign up for this valuable tool, Contact Us today.  

Additional fees may apply with this service. 

If you have Positive Pay setup, click the button below or the "LOGIN" button in the top right corner: