How does Positive Pay work?

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 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.

There is generally a fee charged by the bank for Positive Pay, although some banks now offer the service for free. The fee might well be considered an “insurance premium” to help avoid check fraud losses and liability.

Many of the mainline accounting or ERP systems offer this feature to create the file to be sent to your bank.  Give Cornerstone a call and we can help you get this fraud prevention function running.