Risk Management for Business: Tips 3 - 5

We are continuing our Risk Management tips this week, which focus on common issues that businesses encounter when dealing with clients, NSFs, and cases of potential fraud.  Today the primary focuses are ACH providers and the responsibilities your employees have that can increase the risk of fraud for your company. 

Tip 3: Provide ACH options for all clients without comprising your risk exposure.  The most important way to reduce risk exposure is to secure funds to avoid fraudulent payrolls. Here are some recommendations that we provide to our clients:

·         Direct Wire or DrawDown® Fedwire allows you to offer Direct Deposit to high-risk clients. It eliminates client-funding risk entirely.

o        DrawDown® Fedwire – Puts the payroll provider in control.

o        Direct Wire – Client initiates wire for collection funds.  Payroll provider controls release/suspension of direct deposit transactions

With Cachet’s online system, you can stop the direct deposit transactions on Thursday and prevent them from going to the employees, eliminating the possibility of another set of NSFs.  

Tip 4: Separate your employees’ ACH responsibilities.  Separating the various ACH duties within your company to different employees can reduce your overall risk exposure from internal errors, preventing additional penalties and/or fees.  Can reduce potential ACH errors and/or missing ACH files.

Tip 5: Include proper legal verbiage.  Do you include the appropriate legal verbiage in your client service agreements?  Stating who is ultimately liable for the payroll funds in the event of unfunded ACH funds in your service agreement will also assist in establishing limits to your clients and enforcing those rules on an ongoing basis. This may ultimately reduce your NSFs. This will also protect your company against potential legal battles, should your client “skip town” or avoid funding their payroll(s).

Check back every day this week for more helpful tips regarding Risk Management that could potentially save your company a lot of time, money, and stress.

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