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9 Ways to Protect Your Business from Check Fraud

BankUnited Jan 12, 2024
Learn some keys tips to protect you and your business from check fraud.
Woman holding pen writing a check

Even in this digital era, check fraud remains one of the top fraud risks that businesses face. Consider that 63% of organizations said they were victims of check fraud in 2024, according to the Association for Financial Professionals. Check fraud can cost U.S. businesses billions each year in lost payments, not to mention the time spent investigating and attempting to recover the funds.

Fortunately, this is an area where a little prevention can go a long way. There are numerous actions companies can take to reduce their risk of check fraud, from leveraging digital tools to educating their employees.

Here are 9 steps you can take now to protect your business from check fraud.

  • Automate your bill payments. Take advantage of digital and automated solutions that eliminate the need for a paper check. For instance, BankUnited offers automated bill payment, enabling you to schedule recurring payments through its online banking portals and treasury management services. As a bonus, scheduling payments ensures you pay vendors and suppliers on time and avoid late penalties or fees.

  • Leverage positive pay solutions. With positive pay, BankUnited matches checks your business has issued with checks presented for payment. The bank then flags mismatches, allowing you to review any anomalies or unexpected payments before the money is withdrawn from your account.

  • Monitor your accounts daily. It’s imperative to monitor your transactions and review your accounts daily. That way, you can spot anomalies early and stop fraud before it becomes an issue. Calling your business banker as soon as you see something unusual can give the bank time to halt the transaction. What’s more, fraudsters may move on, given that they’ve not been successful at defrauding your business.

  • Secure your physical checks. How and where you store your physical checks is a critical part of protecting your company from fraud. Keep your blank checks in a secure, locked location. Also consider limiting the number of employees who have access to the checks and who are authorized to write and sign them. The fewer people who can write checks on your behalf, the less the chance that a fraudster gains access to your company checkbook.

  • Be smart about mail. If you’re sending a check by mail to a vendor or supplier, drop the envelope off at the post office instead of leaving it in a mailbox. Keep track of the check’s timeline, including when you sent it and when you expect it to be delivered and cashed. If the timeline becomes too extended, consider calling the recipient for more information and cancelling the existing check.

  • Conduct payment audits. Implement processes for checking and re-checking the security of your payment systems, including checks. This may include diving into reconciliations, verifying signatures, reviewing vendor payment details and even testing employees regarding their fraud knowledge.

  • Educate your employees. Provide your employees with regular training on common fraud threats, the red flags they should watch for, and the proper processes and controls for making payments. Ensure that every employee completes these trainings, even if they’re not part of the finance or AP/AR teams. Additionally, communicate to employees what they should do if they suspect fraud, especially if the threat is internal.

  • Establish and update controls. Issuing checks should be a multi-part process that ideally involves more than one person. Employees should have designated roles that provide oversight of payments, so that no single person approves and issues payments on their own. Other controls include segregating duties within payments and requiring dual approval for large amounts.

  • Respond immediately. Create a culture that encourages your employees to speak up quickly if they suspect fraud and take action to stop it as soon as possible. That means connecting with the bank if there’s an issue, notifying executives or business owners of potential risks, and stopping payments as soon as you determine whether a check is inaccurate or has not been issued.
Check fraud continues to plague U.S. businesses, but the risk doesn’t have to become a reality. By implementing banking safeguards, education, and payment controls, you can reduce the risk of check fraud and protect your company from fraud-related losses.

Interested in learning more about how BankUnited can help you fight check fraud? Connect with one of our business bankers today.
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All content is for informational purposes only and does not constitute legal, tax, or accounting advice. You should consult your legal and tax or accounting advisors before making any financial decisions. Outcomes may vary based on individual circumstances, financial condition, and market factors. Client stories or testimonials are not a guarantee, promise, or indication of future results.