Positive Pay

I've recently joined a company as CFO (having been venturing in other areas for awhile) and have been asked to look into a Positive Pay situation which is apparently a more recent addition to the banking institutions. Is this pretty much standard with all the banks these days? (Apparently this company has had a couple of instances where employees had presented checks(legitimately) to the bank but were denied and told "insufficient funds" which has had a negative impact. I suspect there was a mistake made on the check information supplied to the bank but I also suspect that the bank should have handled this in a different manner. Does anyone have any thoughts/insights with this process and any tips?

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EMERSON GALFO CFO • August 17, 2016

There have been previous threads on Positive Pay...mostly included in wire transfers debit authorization subject threads. The feedback has been mostly positive. It really depends on the CFO's risk/control preferences.

One thing that I noticed is that i believe "Insufficient Funds" should NOT be the reason given for declining the check/s if in fact it is a positive pay process exception. (Of course unless there is really no funds). "Authorization exception" can be used. I think the optics of funds insufficiency contributed to the negative perception. Another factor would be in the settings of the program when first established/set-up. Someone may have inadvertently placed a checkmark on the "Insufficient Funds" option.

P.S. >> Oh wait, one thing I remembered that MAY (emphasis) affect this are sweep accounts where funds are emptied at end of day...but that is a long shot.

Anonymous Advisor • August 18, 2016

Thanks and I will revisit prior threads.

Katherine Simmonds Agent • August 22, 2016

I've used Positive pay for a few years now, but I've never had anyone be told when trying to cash a check that it's NSF. What may be happening is that there is a cash block on the account rather than a Positive Pay Exception. With the current set of accounts we have, our treasury group essentially blocked the ability for someone to walk into a branch and cash a check issued on our account - and I think that's pretty standard when you have Positive Pay on the account.. In both that instance and in the instance of a positive pay exception that was either not addressed or allowed to be returned, the check comes back refer to maker, not NSF. Most people think it's the same thing, but it's not.

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