Positive Pay is a system offered by most banks that requires you to notify the bank that a check has been issued before it will be honored. Positive Pay is in contrast to the normal pay method in which all checks are honored when presented, unless you have notified the bank to stop payment on a specific check. Positive Pay is designed to reduce fraud and is typically used when you have a problem with counterfeit checks being cashed on your account.
With Positive Pay, there are 3 possible ways that you can notify the bank that a check is valid for payment. Not all banks will support all 3 ways, so check with your bank to determine what options they offer. It is perfectly acceptable to start with the first method and then progress to the second and third methods as required.
1. Manually enter the checks one by one using the bank's internet portal.
The bank will provide user credentials to access their website so that you can manually enter each check; usually check number, issued date, and amount, sometimes payee name.
2. Upload a list of checks using the bank's internet portal.
This is a less labor-intensive option and requires that a file containing the list of checks and in a format that is specified by the bank be uploaded to the bank's web site. This is a two-step process in which the check file is manually exported from Scrap Dragon and then manually uploaded to the bank's website. This can be done once a day or as often during the day as desired.
Scrap Dragon can generate files in a variety of formats that can be customized to the specific requirements of your bank. To set this up you will need to provide Scrap Dragon Support with the file specifications provided by the bank. Some banks imply that you can only export your checks from Quickbooks. This is not the case and is much more efficiently done directly from Scrap Dragon.
3. Automatically upload a list of checks directly to the bank using FTP (File Transfer Protocol).
If you generate very many checks then this is the best option to use, if your bank offers it. The system will automatically generate the file and send it to the bank without any user intervention. A schedule can be set up to execute this process on any desired interval during the day. There is more effort involved in setting this up, but the advantages are obvious. To set this up you will need to provide Scrap Dragon Support with the file specifications from the bank, as well as the FTP login credentials and any required security encryption.
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