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How to Prevent Check Fraud

Posted: July 29, 2017 at 11:50 am   /   by   /   comments (0)

Check fraud is an all too common occurrence. The bigger your business, the easier it is for small sums of money to slip through the cracks, adding up to account for significant losses over time. It’s crucial that you remain alert, aware, and diligent at all times to minimize the chances for check fraud and keep your finances safe.

Fragment the Check Printing Process

Don’t place the entire check-printing process in the hands of a single individual. Divide the process up into smaller chunks so no one employee has access to every part of the system. Put one employee in charge of issuing check orders, make another responsible for writing them, and ask a third to balance the accounts. If any one of these employees were to engage in unscrupulous behavior, it would be easier to catch the attempt early, because you have several pairs of eyes on the process.

Use Secure Mailboxes

Image via Flickr by jburlinson

There are many types of check fraud, many of which happen well outside the bounds of your business. Internal safeguards will protect you from fraudulent employees, but you also need to incorporate safety measures to protect the checks once they’re beyond your grasp. Where do your checks go once they’re written, addressed, and stamped? If you’re placing them in an open mailbox outside your company’s building, you’re leaving them exposed to fraud right on your doorstep. Take your checks to the post office or put them in a secure mailbox that you can’t simply reach into.

Use Enhanced Security Features

Printing your checks with standard paper and ink leaves you exposed to easy forgeries. Use secure checks with advanced safety and security features so others can’t simply print a copy with the right piece of software. Look for features such as chemically reactive paper, embedded fluorescent fibers, heat sensitive icons, and watermarks. Checks with a tamper resistant coating will cause alterations to smudge and bleed, so others can’t easily write over the printed sum. Multicolored backgrounds will stop fraudsters from creating a convincing copy.

Monitor Your Accounts Closely

Balance your accounts monthly, and have two sets of eyes on the reports. If someone does manage to create and cash a fraudulent check, you want to catch the activity early, before the missing sum has time to grow. If you don’t balance your accounts until it’s time for quarterly reports or annual reviews, the window for fraud is far too big. Keep a keen eye on your bottom line at all times.

Know When to Write Checks

Checks are no longer your sole option for transferring money from one account to another. Direct bank transfers are available for employee payroll payments. You can use card payments to handle utilities or regular purchases. Consider the security implications of each option and choose the safest payment method for each type of transaction.

Educate yourself and your employees about check fraud and encourage everyone in the company to be diligent about watching for suspicious activity. With the right precautions, you can keep your business safe from many types of fraud.

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