By overcoming objections to Positive Pay services, you create a win-win solution for both your customers and your institution. Positive Pay is one of the most valuable Treasury Management solutions your institution offers to businesses to prevent fraud. However, for some Treasury Management Officers (TMOs), it’s the hardest service to sell. Why? Because typically, business customers have five key objections to paying for this valuable service.

The best opportunity to sell Positive Pay to your new business customers is during the prospecting process. Both business bankers and TMOs must understand how this service works and who’s liable if the customer experiences fraud. In this blog, we discuss what the top five objections are and how you, as a salesperson, can overcome those objections.

Customers don’t think that fraud will ever happen to them…until it does.

Just like other accidents, tragedies, or natural disasters, people don’t think it can happen to them… until it does. Experiencing fraud in your accounts – whether personal or business – can feel like the world is ending. It is a horrible experience to live through and it can take even years to recover. Therefore, you need to learn about real life situations where others experienced fraud so you can share with your business customers. The idea is not to instill fear in them but to create awareness.

True Story: A business owner pre-signed checks and left them with the bookkeeper. One day, the business owner had an emergency and called the bookkeeper to pay a specific bill. The bookkeeper was on vacation, so she called her assistant to find the pre-signed checks in her desk drawer. She gave specific instructions to pay the bills, and the assistant did a great job. She paid the bill on time and the crisis was averted. However, she also proceeded to write a check for $3,500 to herself and cashed it. The next week when the business owner discovered that the money was gone from the account, he called the bank. In this instance, the bank was not liable because the customer signed a legitimate check. The customer was out the $3,500. With Positive Pay for checks, he would have found out the very next day and would have stopped the check from being cashed. These are the stories you need to share with customers to encourage them to sign up.

Too expensive.

The next objection is that Positive Pay is too expensive. A monthly fee of $25 to $45 is not expensive compared to the alternative of losing thousands of dollars. In contrast, Positive Pay is one of the most expensive services that institutions pay for. In addition to paying the providers, institutions also have the staff expenses. This is an expensive service to provide for your business customers and you should get paid for it. However, many institutions offer this important and valuable service for free. They claim that the expense of fraud is way higher than the expense to absorb the cost of Positive Pay. While that may be true in some cases, I disagree that it should be given away to customers. It is like a patient needing an MRI telling the doctors that they don’t want to pay for this service because it’s inconvenient and too expensive. Why should doctors give away MRI services when they invest millions of dollars on machinery plus the skilled staff? They shouldn’t and we all know they don’t. We all pay for our own MRI tests when needed.

Business customers need a tool to identify, prevent, and avoid fraud in their accounts. This takes the investment of time and money on their part. Your institution offers this amazing tool plus staff who train them and guide them through the process.

Customers don’t want to spend time uploading the checks issued batch files.

As mentioned above, it takes an effort from both the customers and the institutions to prevent and avoid fraud. If they are not willing to upload the batch of checks or ACH to ensure the institution only pays the authorized payments, then they should be responsible for fraudulent transactions. Many institutions are now requiring customers to sign a “Hold Harmless” or “Waiver” for those who refuse to use the Positive Pay services. When offered with this option from the start, most often they will agree to sign up.

They don’t like to be tied down to approve exceptions by the deadline.

Daily, the system matches the cleared items to the ones sent by the customer. All the “unmatched items” must be reviewed by the customer by a certain time in the morning. The institution does not pay these items unless the customer authorizes them to do so. Business customers need to spend time to approve or reject the checks or ACH transactions that clear daily. Although systems can override the payment authorization, this is unwise and defeats the whole purpose of the service. If customers set the system default to “pay all items without approval,” then they should hold the institution harmless.

Misconception that the bank will be liable for fraudulent checks or ACH transactions.

As shared in the above story, the customer was fully liable for the $3,500 check that was cashed fraudulently. Even then, the business banker wanted to “meet the customer half-way” and have the bank share the customer’s losses. Leadership denied the banker’s suggestion. Although, in this particular case, the customer actually signed a legitimate check, it could have been prevented. In most cases, customers experience true fraud, and it can be avoided by utilizing this Treasury Management service.

The key is education. Institutions must educate business bankers, their customers, and TMOs about Positive Pay. The entire team that services business customers must be knowledgeable about TM services and specifically on Positive Pay. Overcoming objections to Positive Pay services is challenging and it takes time but it’s worth it. The team approach is what will save thousands of dollars to institutions who are serious about preventing fraud and helping their business customers.

Need help with your Institution’s Treasury Management services? Let us know. We’re here to help.

Looking for resources to train your staff on Treasury Management? Our training system, TMClarity, solves your Treasury Management training needs.

There are more than five benefits of Positive Pay services to your business customers. But in this blog, we focus on the top reasons community banks and credit unions must offer this important service. Let’s start by defining what is the Positive Pay service.

What is Positive Pay?

Simply put, Positive Pay is like the fire insurance on your home you hope you never have to use. For businesses, it’s their assurance that only the checks they write and only Automated Clearing House (ACH) transactions they initiate will be paid by their institutions. Any checks or ACH transactions not authorized by the company return unpaid. The financial institution then files a “Suspicious Activity Report” (SAR) to alert government officials about the fraudulent transactions.

Technically, the business uploads a file with the list of checks to the financial institution. The institution matches items clearing against the authorized list and alerts the business of any discrepancies. The business then decides which items to pay or return. That is Regular Check Positive Pay. The Reversed Positive Pay, the institution initiates the list of items clearing that day. The business then tells the institution which ones to pay or return.

Below are five benefits of “Positive Pay” services and how they benefit both the businesses and institutions:

Check and ACH fraud is significantly lower.

The Financial Crimes Enforcement Network (FinCEN) issued an alert to financial institutions in February 2023 about the alarming increase of “mail theft-related check fraud.” (FIN-2023-Allert003) Financial institutions must be vigilant in identifying and reporting any activity related to check fraud. And it’s happening the old fashion way—checks stolen from the U.S. Mail!

In talking with our clients, they are also experiencing an increase in fraudulent ACH transactions. The good news is that there is help! Financial institutions can offer the Positive Pay and ACH Positive Pay services for businesses to protect them from both check and ACH fraud.

Positive Pay protects both the businesses as well as the financial institutions.

As one can imagine, implementing this service on business checking accounts can save businesses millions of dollars. In addition, one fraudulent transaction can cost a business a monumental amount of time researching and closing old accounts. Once a business experiences fraud, the institutions require them to close the affected accounts and open new ones. This creates a huge amount of work for both the business and the institution. Implementing Check and ACH Positive Pay services on the main business operating account always pays off.

Increased internal controls for businesses.

A bank client once shared that a business customer used to “pre-sign” checks and leave them with his bookkeeper. During his vacation, the owner called the bookkeeper and asked her to issue a check as a matter of urgency. The bookkeeper happened to also be out of the office. She asked her assistant to “go to her desk and open the drawer where she would find several pre-signed checks.” The bookkeeper’s assistant issued the urgent check as requested. But she also issued a check payable to herself for $3,500.00!

When the check cleared and the customer found out about the fraudulent check, he contacted the bank in a panic. Guess what? The bank was not liable for this fraud and the customer had to absorb the entire loss. The bank offered this business customer the Positive Pay service and he declined it. The business owner pre-signed a legitimate check. Therefore, although the check was not fraudulent, the employee committee check fraud. If this customer had Positive Pay, he would have found out the very next morning and the check would not have been cashed. Small Businesses are notorious for not having internal controls in place and Positive Pay forces them to implement minimal controls.

Increased non-interest fee income for financial institutions.

Financial institutions are starving for additional non-interest income and Treasury Management (TM) services precisely bring that! Positive Pay is one of many TM services that businesses can benefit from. But all these services cost money to implement and to support. Therefore, institutions should charge business customers appropriately. Unfortunately, that is not the case. Most community banks and credit unions give it away for free. They should ask their business customers if they give away some of their products to their customers. I guarantee they would say “no, of course not”!

An opportunity for financial institutions to partner with businesses in the fight against crime.

The goal for business bankers should be to become partners with their business customers. Community banks and credit unions have an incredible opportunity to do so by offering Treasury Management services to their business customers. However, bankers must receive training to understand and value each service that helps businesses succeed. TM services allow businesses to accelerate their receivables, control their disbursements optimizing their cash flow management. In addition, TM services like Positive Pay protects businesses from losing money and time due to check and ACH fraud.

There are more than five benefits of “Positive Pay” services  to business customers. I hope these top five benefits encourage your institution to share the value of Positive Pay with your business clients. They will then consider you a valuable partner in their business.

Looking for ideas to expand your Treasury Management reach to new business customers? Look into the TMClarity Framework, our comprehensive and transformative training and Treasury Management business management system that leads to greater sales success, higher margins, and increased customer retention in a competitive marketplace.