Do You Need to Collect A Voided Check Or Banking on Letterhead With Vendor Banking?

No. But don't stop reading. Here's 3 reasons why (I'm sure there are more) and what to do instead.

Voided Check and Banking on Letterhead Can Be Forged

But not only that - fraudsters no longer need to go through the hassle of printing them and making sure the paper weight or the format of the print version is correct. Both of those documents will be sent electronically, so it's easier than ever to:

1. Take a screenshot of a check with the free Snipping Tool from Microsoft.
2. Paste it in the free version PowerPoint/Google Sheets - or similar.
3. Draw a white box over the routing number, account number, name, and bank branch address/logo.
4. Draw a text box and place it over the routing number and enter whatever routing number the fraudster wants to use.
5. Repeat three more times for the account number, name and bank branch information.
6. Use the freehand tool to "write" void on the check
7. Save as a PDF - non-editable of course; and
8. Send it to you and your team so you can say you collected a voided check.

And that's the non-AI, non-techie way of doing it - many of you are going eight steps? That would have only taken me "?" steps and I wouldn't have started with a screenshot of a check....and so on. Doesn't matter because those 8 steps take less than 10 min, so the point is clear.

Same with banking on vendor letterhead or on banking letterhead.

Voided Check and Banking on Letterhead Can Be Outdated

Banks merge and are acquired all the time. Vendors merge and get acquired. And they move too. Depending on your vendor mix, you could have vendors that don't use checks - they just keep them around in case buyers like you ask for them. Then when you do - guess what? They have that handy check to send you so they can check that requirement off the list.

Only that check is old. Their bank was acquired and while the account number and branch address stayed the same, the routing number changed, but the vendor didn't read the notification that far down and kept the checks. Great - now they are giving it to you.

Same with the banking letterhead, only worse. Someone may have had to go to the bank to get that letter and will keep it until global warming reverses, through bank acquisitions, branch moves and their own move.

Vendors Don't Buy Checks or Their Own Letterhead To Put Their Banking On

Again, depending on the type of vendors you have, many of those vendor types may not have checks, or their own letterhead to put their banking on. They probably didn't request their banking on letterhead from the bank yet and would need to go into the bank branch to request it. Or just forge it - how are you and your team members supposed to know the difference?

That's what happened when at a virtual Accounts Payable group meeting I attended last year. We were discussing fraud and an attendee was being helpful and sharing a fraudulent bank letterhead with vendor banking they recently received. The goal was to show where the document could be forged by highlighting that information. Almost every typed word was highlighted.

Another example is a client who requested a check or banking on letterhead for all vendor types. One vendor type, however, were those that had memberships - regular people - not vendors in business trying to sell you something. Biggest complaint? Members said they don't have checks.

What Should You Do? Collect the Right Information on the Right Form

Create your own Company Branded ACH/Wire Form and require at least the following information:

• Payee Vendor Registration Number (TIN, VAT, etc) - Use this information to compare to other documents received for new vendors. For existing vendors compare it to what is in the vendor master file to verify it's the right vendor to update.
• Remittance Address with Country - Use this information to compare to other documents received for new vendors. For existing vendors compare it to what is in the vendor master file to verify it's the right vendor to update. Compare the vendor country to the bank country, and if different, that could be a red flag for fraud.
• Contact Information - If all checks out, now you may have the actual right person you can contact for future change confirmations.
• Remittance Email - This can be different than the contact email. Now you have somewhere to send the remittance so you don't get that phone call asking what invoices were included in the payment.
• Vendor New Banking - "Legitimate" vendor bank account information. Where you make the vendor's payment.
• Vendor Old Banking (for changes) - Existing vendor bank account information. Where you last made the vendor's payment. Verify it matches what is on the vendor record. If they don't have it and can't get it - then you have to wonder - how did they get the new bank information?
• Vendor New/Old Bank Branch Address With Country - Verify the bank branch information is valid and exists. It's a great time to validate that your bank branch table is up to date. Compare the vendor country to the bank country, and if different, that could be a red flag for fraud.
• Internal Employee They Have a Relationship With - Now you have someone to reach out to if there are red flags or your suspicious radar is up.

Check out my template as an example.

Each of these pieces of data is a deterrent for an actual fraudster, but can be a first step to ensuring that you are paying the right vendor and with validation, that the payment will be successful.

Now you can continue to collect a voided check or banking on letterhead - but only in addition to your Company Branded ACH/Wire form.

Speaking of Avoid Fraud and Returned Payments

Validation is the critical. Attend this #In5Steps webinar to validate your vendor's bank details not only to avoid paying fraudsters, but also to avoid the rework, increased vendor calls and costs that result from returned payments.

Sponsored by Financial Operations Networks (FON) here are the immediate takeaways:

• 5 Steps to Validate Vendor Banking When You're Doing it Manually
• How to Expand that Confirmation Call to Reduce the Potential for Fraud
• What Information You Should Be Collecting to Avoid Fraud and Returned Payments
• How Many Steps Automation Can Eliminate

Click to Register to watch on-demand and download the handouts.

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