Five accounting basics every AP department needs to have in place.
on Wed, Jul 22 2015 2:52 pm
Advantage Business Equipment
Five things every
accounting department needs to implement to protect the check payment and
We put together our list of the top systems we see the most
successful businesses and accounting departments using to process check
payments. For large businesses with
established AP departments they probably already have great systems in place.
The problem we see is with the new and fast-growing startups. They haven’t had time to establish systems
yet so they are vulnerable to potential theft.
These businesses should start early and make sure they build a secure payment
process inside their growing accounting departments to avoid any check fraud
Institute clear separation of control so the
person processing the checks is not the same person who signs the checks regardless
of position with the company.The “separation of control” or “separation
of duty” is by far the most important protection every accounting department needs
to have in place.
This may sound too obvious but never use a rubber
stamp to sign checks. These can be easily lost or misplaced so it’s best to
avoid this style of signature application.
Set up value based restrictions dependent on the
dollar amounts of the checks. Something which
makes sense for your company but keeps the department from automatically signing
and processing any abnormally large checks.
The amount will be different for each company but never allow large
checks to pass through without adding one additional approval. We recommend flagging
check above 150% of the company norm. For
example: If a standard check is $5000 they should set a limit at $7.500. Any
check above this requires additional approval.
Use the “Positive Pay” system offered by your
bank. Every bank offers positive pay so check with your branch on the cost and guidelines
to use it.
Before using any automated check signing program
or machine, make sure you notify your bank that a digital signature will be
used. This will avoid any issues with
your bank processing checks.
Checks have been a part the payment process for businesses since
1681. That’s 330 years of check processing history and 330 years of criminals
looking for loop holes. New innovations
in ACH payments, ApplePay and other POS payment systems are changing the way
money moves but payment by check for business is not going away anytime soon.
It’s still the easiest and safest way to pay and track payments for any
business to vendors and customers.
Check fraud and company embezzlement remains a $500 billion problem
so take some simple steps to protect your business, customers, and employees
from the issue.