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Positive Pay is an automated fraud detection tool offered by the Cash Management Department of most banks. It is a service that matches the account number, check number and dollar amount of each check presented for payment against a list of checks previously authorized and issued by the company. All three components of the check must match exactly or it will not be paid by the bank.
Positive Pay requires your company to send (transmit) a file of issued checks to the bank each day checks are written. When the issued checks are presented for payment at the bank, they are compared electronically against the list of transmitted checks. The check-issue file sent to the bank contains the check number, account number, issue date, and dollar amount.
When a check is presented that does not have a "match" in the file, it becomes an "exception item". The bank sends a fax or an image of the exception item to the client. The client reviews the image and instructs the bank to pay or return the check.
There is generally a fee charged by the bank for the Positive Pay Service. Design Manager can be set to create Positive Pay Files automatically. These options are set in the Account Glossary for each checking account. Design Manager does NOT transmit the files to the bank, it the responsibility of the user or A/P personnel to transmit the files to the bank daily using whatever method that the bank requires.
Positive Pay file creation is setup by selecting a bank from the list on the Account Window. There is no standard in the banking industry for Positive Pay files or the transmission of the files therefore each banking institution has a different format and different method of receiving the file. If your bank is not on the list, you must ask your bank for the format (layout) of their Positive Pay Transmittal File and submit it to Design Manager, Inc. Design Manager can add your bank to the list after we receive the file format information. For more information contact Design Manager Technical Support.
Setting up Positive Pay
To set up a Design Manager Checking Account for Positive Pay, first you will need to create a folder/location for the Positive Pay files to be stored. For example, using Windows Explorer create a new folder on the C: drive of the computer used to transmit the files to the bank; name this folder “Positive Pay.” If multiple Checking accounts will use Positive Pay, we suggest a sub folder for each separate account.
In Design Manager, go to Accounting - General Ledger - Accounts.
Highlight and Edit the Checking account and select the Positive Pay File Creation type for your bank in the drop down menu.
Enter the Positive Pay File Location of the folder/directory you created earlier. Example: C:\PostivePay
Design Manager will create a new file inside the directory you created and linked to the account with the extension .txt for each day checks are written and accepted. When more than one check run is done on a given day, Design Manager will keep adding to the same file.
When transmitting the file to the bank for the day, make sure no other checks are issued that day after the file is transmitted. Design Manager recommends that after a file is sent to the bank that the Positive Pay file is immediately moved to another folder. Design Manager does not have the capability of re-creating or creating files retroactively, please be careful handling your files.