How to Prevent Check Fraud for Your Business
Check fraud continues to be a major threat to companies of all sizes. Forbes reported that 66% of fraudulent acts in business payment processing are committed using checks.
Checks continue to remain relevant in our modern business climate and are often utilized to pay vendors, employees, and other accounts payable.
Check fraud can result in more than just direct financial losses. These acts also expose sensitive business and client financial information. This exposure could result in excessive long-term damages.
In the following guide, we examine the risks, sources, and types of check fraud. We will also reveal everything that you need to know to protect your organization from these crimes.
Internal Vs. External Check Fraud
A wide range of potential suspects could exist in a business check fraud scheme. These acts may be committed by internal or external sources, or by a combination of multiple individuals.
Internal sources refer to an individual who is employed within your company. This act is often committed by someone who has direct access to accounting tools, applications, and/or physical checks. To commit fraud employees may alter checks, intentionally manipulate data reports, and/or use business documents to write checks to themselves.
External check fraud occurs when an outside criminal uses your business checks to steal money from the company.
Types of Check Fraud May Involve:
- Altered Checks
- Closed Account Fraud
- Forged Checks
- New Account Fraud
- Counterfeit Checks
There are several different methods that an employee and/or outside source may use to commit check fraud. Employees may also work with outside sources in part with their fraudulent check scheme.
For example, an inside employee may use and share their access to vendor and/or employer account information with an outside party.
1.) Implement Procedures for Theft Prevention
Remember that the potential for internal and external fraud is an ongoing threat. It does not matter whether your employees have been with the company since you began operations. Any employee could attempt check fraud under the right circumstances.
Implementing procedures inside your business accounting department can reduce the likelihood of internal theft.
Examples of Preventative Procedures Include:
- Surprise Audits
- Transition to Electronic Checking Software
- Require Additional Signatures
- Review Data Regularly
- Choose High-Quality Check Stock
Protect your business by mandating a minimum of two employees are responsible for each account payable.
2.) Never Send Checks by Mail
Sending checks by mail significantly increases the risk of external theft. Putting a check in the mail allows criminals to gain access to your business’s and your client’s financial account information.
Criminals could alter checks that were intended to go to a vendor or use the account data, including your signature, account, and routing numbers, to create counterfeit checks.
3.) Regularly Review Transaction Data Reports
Accurate data tracking, review, and analysis can prevent numerous disastrous criminal check occurrences. The majority of cases of internal check fraud have been going on for years before the criminal is apprehended. This is because the employee not only has access to financial information, but experiments with smaller amounts, and gets away with it. These employees also have insider knowledge about the lack of caution that an organization uses in their transaction reviews.
4.) Invest in Secure Online Check Writing Software
The right online check writing software program can prevent fraud and stop attempts at theft in their tracks. You can use these programs to set up a custom list of requirements for each account, including the type of transactions, payees, monetary restrictions, signature requirements, and more.
These security measures act as a safeguard against any attempts at check fraud. Any attempts to cash a check outside of your predetermined perimeters will be automatically denied.
Benefits of Online Check Writing Software:
- Transaction Reports
- Customizable Parameters
Online check writing software also eliminates the need for paper checks. Paper checks significantly increase the risk of your business becoming a victim of check fraud.
PrintBoss Online Check Writing Software
Safe, secure financial processes are critical for the current and future wellness of your organization. Invest in the best tools and resources to ensure that your checking accounts are safe from internal and external fraudsters.
Reach out to PrintBoss today to learn more about how our online premier online check writing software can protect your financial future.