NEW TREASURY SUPPORT INFORMATION

To ensure that our customers are supported without delay, Planters First Bank now has a dedicated email address and phone number:



treasury@bankplanters.com

877.645.1146

Customer Spotlight: GHS Distribution Inc.

To see the full spotlight click here.

ACCOUNTS PAYABLE FRAUD

Accounts payable fraud is a common type of fraud that targets a company’s accounts payable department, which is responsible for paying suppliers and other vendors. The fraudster emails the accounts payable department demanding an immediate payment or claims their payment is overdue by 30, 60, or longer. The fraudster may disguise themselves as a current vendor and just states their payment information has changed or the fraudster may have already hacked into the CEO or CFO’s email and generated an email to the accounts payable department instructing them to pay the invoice as this is a new vendor. Either way, the accounts payable department unknowingly pays the fraudulent invoice. A typical organization loses 5% of its revenue to fraud every year, with a median loss of $125,000, according to the Association of Certified Fraud Examiners (ACFE).

Detecting fraud in small businesses is an ongoing process, with new scams popping up regularly. Here are a few general tips to keep your finances safe.

1.    Implement Strong internal controls: Controls like fraud training, codes of conduct, management reviews, and countersignature requirements can all help prevent fraud.

2.    Implement an escalation procedure for your internal teams to make it easier for them to report unusual/suspicious behavior. 

3.    Implement multi-factor authentication controls when sending payments including dual control procedures. 

4.    Contact us to determine security procedures we offer to help you mitigate fraud such as text alerts, positive pay, and other security offerings.

5.    Don’t pay anyone based on a single email without verifying the authenticity of the request.

It’s sometimes easy to believe that fraud is something that happens to other businesses, not your own; however, detecting fraud in a small business using the tips above helps you avoid becoming complacent and protects your money and reputation. By putting safeguards in place, you’ll be able to make your company a less attractive target.

Nacha Rule Requirements for Differentiating Between Corporate and Consumer Accounts.

The Nacha Rules allow Originators to send different types of standard entry class (SEC) codes. An SEC code is a three-letter code that describes how a payment was authorized by the consumer or business receiving an ACH transaction. SEC stands for 'Standard Entry Class'. SEC codes are defined and maintained by NACHA, the governing body for the ACH network. The most used SEC Codes are PPD (Prearranged Payments and Deposits) and CCD (Corporate Credits and Debits). 

Since the file format requires only one SEC code, consumer and corporate transactions are to be in separate batches with the appropriate SEC code. Consumer transactions are to reflect a consumer name in the “Individual Name” field and corporate transactions are to reflect the corporate name.  A receiving financial institution relies on these codes when returning transactions; however, it is a Nacha requirement for the ACH Originator to select the correct code based on the type of account (e.g., consumer vs. corporate account). 

The Type of Account Drives the Return Timeframe

When a receiving depository financial institution receives a transaction, there are return timeframes that apply based on whether it is a consumer or corporate account. Consumer transactions have a 60-day deadline to return and corporate transactions have a 2-day deadline to return. This does not mean an ACH Originator may choose a CCD to shorten the amount of time the receiving depository has to return the transaction as this is a direct violation of the Nacha Rules. The receiving depository financial institution has rights under the Rules to respond to an incorrect use of a standard entry class code.

For example, if the ACH Originator sends a CCD to a consumer account, the receiving depository financial institution may return the transaction as an R05 return code. An ACH Reason Code R05 is a code used to indicate that an unauthorized debit to a consumer account has been detected using a corporate standard entry class code.

To comply with Nacha Rules, it is important to include this requirement as part of your ACH Procedures. If you have any questions regarding the proper use of standard entry class codes, contact us, and we will be happy to discuss them.