Check fraud is a major financial crime, with annual losses exceeding $20 billion. The American Bankers Association reported that check fraud losses are growing 25 percent a year.

Positive Pay is an excellent service offered by the Treasury Management Department of many banks. It helps stop most (not all) counterfeit and altered checks. When Positive Pay is used with a highly secure check, fraud losses can be dramatically cut.

Positive Pay requires the company to send (transmit) a file of issued checks to the bank each day checks are written. When those issued checks are presented for payment at the bank, they are compared electronically against the list of transmitted checks. The check-issue file sent to the bank contains the check number, account number, issue date, and dollar amount. Sometimes the payee name is included, but is generally not part of the matching service.

When a check is presented that does not have a “match” in the file, it becomes an “exception item.” The bank sends a fax or an image of the exception item to the client. The client reviews the image and instructs the bank to pay or return the check.

For more information on Positive Pay, visit www.positivepay.net.