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Start Off the New Year With A Treasury Management Checkup

The start of the year is a good time for cash managers to perform a back to basics checkup. Get started here.

The start of a new year is a good time for cash managers to perform a “back to basics” checkup. The goal should be to make sure you know where your company stands with regard to your cash management processes and procedures, including your internal controls and internal fraud risks.
Fraud is an especially costly concern for businesses today. According to the 2020 Report to the Nations, a bi-annual fraud study conducted by the Association of Certified Fraud Examiners (ACFE), the median fraud loss per case last year was was $125,000, but the overall average loss per case was $1.5 million.




Fraud Prevention Techniques

The good news when it comes to fraud is that there are concrete steps you can take to help guard against fraud. The most important fraud prevention step is to implement strong internal controls. “This will help eliminate many of the opportunities employees have to commit fraud,” says Cadence Bank Executive Vice President and Treasury Management Executive Katrina Michalk. A few of the most effective internal controls she lists are:
  • Separating duties and reconciliation responsibilities for employees who create and sign checks and those who originate and approve electronic transfers
  • Reconciling accounts in a timely manner — daily, if possible
  • Performing all financial transactions on a dedicated computer, not one that is used for general web browsing or email
  • Using the security token provided by your bank when releasing ACH batches and wire transfers
  • Protecting and frequently changing passwords and other online credentials
  • Keeping anti-virus software up to date and applying operating system and application updates regularly
  • Drafting an employee Internet policy that prohibits employees from visiting undesirable websites known for malware
  • Conducting background checks on employees, especially those working in finance and accounting
  • Ensuring proper management oversight of company finances
  • Making sure finance and accounting employees take all their vacation time.
  • Establishing a fraud hotline



Bank Fraud Prevention Tools

In addition, your bank offers treasury management products that can help you combat fraud. “For example, with online banking, businesses can view their accounts daily to ensure that only intended debit and credit transactions are made,” says Michalk.
Positive Pay and ACH Positive Pay are two other effective fraud prevention tools. These act as fraud prevention systems for check and electronic fraud, Michalk explains. “They alert businesses to potentially fraudulent transactions before they can impact the company’s accounts. Pre-determined filters set by the business trigger an alert when payments do not meet the criteria. The business then has the option to pay the item or return it within a designated timeframe.”
Lockbox is another treasury management tool that can help prevent fraud. This service enables businesses to accept payments directly at their bank rather than at their business location. The bank can then manage payment processing, data entry and deposit preparation and help prevent internal fraud by segregating duties.





Cash Management New Year’s Resolutions

Michalk lists a few cash management New Year’s Resolutions for treasury managers:
  • Do more with less
  • Improve efficiency
  • Reduce costs
  • Automate integrations
  • Utilize your bank’s image storing and retention platforms
“Treasury managers should consult with their bank treasury officer for assistance in each of these areas,” says Michalk. “We can help you implement time- and cost-saving treasury management products like accounts receivable lockbox, invoice-to-pay, ACH origination and purchasing cards.”
Please contact a Cadence Bank Treasury Management representative if you would like to discuss these and other treasury management products in more detail.

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

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