Risky Business: paper Cheque Fraud
Did you realize that cheque fraud was a potentially significant risk? Paper cheques continue to be a prime target for criminals seeking to steal funds from companies. In recent years, many organizations have eliminated paper cheques. Unfortunately, many others still use them and are likely unaware of the risks of using this payment method. Are you still using paper cheques? Then keep reading!
cheque fraud in the news
An employee of Teva Canada, a Toronto-based pharmaceutical company, fraudulently requisitioned 63 cheques totalling $5.4 million, payable to two fictitious entities and four Teva customers.
The employee had no authority to requisition cheques or approve payments. The cheques were processed and the funds deposited into bank accounts of the employee and his accomplices.
Teva sued the banks and argued that they should not have cashed the phony cheques, however the Courts ruled that the banks were not responsible for the loss.
Clearly, Teva Canada’s cheque woes demonstrate the risks of using a paper cheque to pay suppliers. Paper cheques can be lost, stolen, counterfeited, forged, altered and improperly endorsed.
The good news is that electronic payment methods are widely available – therefore, there is no longer any need for you to use paper cheques and expose your organization to such risk.
Benefits of electronic payment methods
- You can eliminate the costs associated with cheque printing, mailing and handling
- Your security and internal control is significantly strengthened, reducing chance of fraud and theft because EFT payment approvals utilize strong on-line banking security, instead of much weaker paper-based signature approvals which is muc
- Storing and securing your blank cheques becomes a non-issue
- You will be able to reduce both clerical work and errors
- You will improve your ability to manage cash flow. Payments can be set up with various due dates, and postdated for up to 35 days
- You no longer need to worry about stale-dated cheques
- It will be simpler to do your bank reconciliations, because there will be no outstanding cheques to account for
- Your payment approval process is streamlined. Payments are ready for approval as soon as they are entered into your EFT system and can be approved from anywhere, anytime, by authorized signing authorities. Added benefit: when your signing authorities are out of the office, they can still approve payments easily from their smart phone!
- Your organization can reduce your carbon footprint because EFTs are environmentally friendly
If you would like to find out more about how you can eliminate paper cheques and reduce business risk, or you need help improving operating efficiency, reducing costs and strengthening your organization, please contact me at 613-727-1230 ext. 212 or firstname.lastname@example.org
Richard MacNeill, FCPA, FCMA, CMC, Dipl. T. is a partner at OTUS Group, a team of advisors to business, government and not-for-profit organizations.