No one wakes up in the morning thinking about fraud. It usually doesn’t come with a warning or an obvious red flag. Most of the time, it looks like a perfectly normal check clearing your account, until a vendor calls asking why they were never paid.

That’s why Positive Pay is such an important bank service.

Put simply, Positive Pay helps identify check fraud before money ever leaves your account. When you issue checks, the bank compares them against a file you’ve already provided. If something doesn’t line up, like the check number, amount, or payee (with payee name verification enabled), the bank flags it and asks you to review it before the check is allowed to clear. 

Without Positive Pay, a fraudulent check that looks “close enough” can clear without anyone noticing. You find out only after the money is gone. With Positive Pay, you get a chance to stop it first.

Check fraud hasn’t gone away; it’s gotten more common and more sophisticated. Checks get stolen, amounts get altered, and payees get changed. Public entities are especially easy targets because payments are more predictable and a lot of information is publicly available.

When fraud does happen, one of the first questions is usually whether Positive Pay was in place. If it wasn’t, that becomes a much bigger conversation and could result in unhelpful attention or pressure on public officials.

The cost for Positive Pay is minimal compared to the potential loss from a fraudulent check. It also saves staff time and a lot of frustration, and of course, protects public funds. It’s one of those services you hope you never need, but you’re very glad to have when something goes wrong.

If you still issue checks, Positive Pay isn’t excessive. It’s a simple, practical control that helps prevent problems before they happen.

Looking for more ways to strengthen your financial controls? Contact us today to learn practical strategies for safeguarding public funds and improving your cash-management practices.

About the Author Mike Abbott holds a B.S. in Corporate Finance with a minor in Data Science from St. John Fisher University and an MSBA from St. Bonaventure University. As a Relationship Specialist at three+one, he works directly with public entities, optimizing their liquidity and treasury services. He has even created specialized analytical tools for three+one’s clients, enhancing their liquidity management strategies. Mike also manages RFPs for banking and financial services for higher education and municipal clients across the United States. We invite you to contact him with your questions at mja@threeplusone.us.