Part 4 of our series on Cash Disbursements. In our recent Fraud Survey, we asked churches to respond to this statement:
“Our church has established a “Positive Pay” program with our bank.”
Survey Results – Less than 5% of the respondents use such a program.
While the phrase “Positive Pay” is the trade name of one commercial bank, it has become a generic term for an agreement between a bank and its customer that works like this:
- The church establishes a standard routine for paying bills, for most churches once each week.
- A list of approved bills is compiled and transmitted to the bank.
- The bank only clears checks or other charges presented for payment that are on the church’s list.
- The church is also informed of any checks or charges presented for payment that were not included on the list.
Increasingly, businesses are using arrangements like this to address a newer face of economic fraud. Fraud experts have historically used the “fraud triangle” of pressure, rationalization, and opportunity to describe the key ingredients of a fraudulent act. Generally, this discussion has focused on “inside jobs”.
However, with the advance of technology, a new face has arrived on the scene – the “hacker” completely outside the organization (in many cases completely outside the country!). Using Positive Pay is one protection against this type of fraud activity.
Perhaps a new leg needs to be added to the fraud triangle. (I guess that would make it a square…)