Protecting Capital: Using your bank to protect your assets

Each month we process tens of thousands of pay transactions.  They include Employee Direct Deposits, Worker’s Compensation Insurance premiums, Employee Benefits premiums, lien payments, garnishments and paper checks.  Electronic payments are more secure than physical checks.  Physical checks go through many hands depending on how they are cashed or deposited.  Those hand to hand transactions are where we have seen some significant fraud efforts which can impact a client’s bank account.

One case which best illustrates the process and effect happened to one of our clients.  We printed and delivered paychecks to the client.  They handed them out to the employees.  At some point a perpetrator found one and then “washed” the check.  “Washing” in this case was the check being altered by changing the payee’s name and the amount.  When presented at the bank, the account numbers match, funds are verified, the name of the check matched the identification presented and the cash was handed over.  In this case about $4000.00 more than the original amount of the check and it was not found for more than 10 days after payday.

You can imagine going into your bank account and finding it short by 4k.  Not a good feeling.  Of course, we were called, we called the bank, the client called the authorities and an investigation begun.  The scenario above is the result of the investigation.  The outcome was the bank taking the hit for cashing a fraudulent check.  However, the client was out the funds for weeks.

Your capital can also be exposed to honest mistakes.  Depending on how payroll is process and verified prior to payment, an error in the placement of a decimal point could take 10 Grand out of your control.

Protecting your capital from this kind of fraud or exposure is simple.  Just set up a separate Payroll Account.  Most banks will allow you to set up specific account for payroll transactions at no additional charge.  The security comes with limiting the amount of money exposed.  So, if an attempt is made to take more money than should be allowed, the account is drained, further transactions are stopped and you are notified immediately.  The process to fund payroll is easy, just transfer the amount of your payroll liability (Direct Deposits, Checks, Payments, Taxes, and any processing fees) to your Payroll Account from your working capital account.

An additional benefit is the ability to easily see payroll anomalies in one account.  You will minimize the impact and soft costs required to deal with stop payments, bonus payments, termination checks, and miscellaneous reimbursements.

If you are not convinced that a separate Payroll Account is a Best Practice please call us and let us know why.  We are working to keep you capital safe, your employees paid and your costs down.

For a payroll audit or for more information regarding our payroll services, please call Malcolm or Scott today at 800-451-1136.

Written by:

Scott Evers

Scott Evers

Chief Distribution Officer

Connect with Scott on LinkedIn: