Legal bookkeepers need to manage positive pay, a bank fraud-prevention service requiring daily check approval before they clear. Exposed routing and account numbers can lead to fraud. The task is time-intensive, so charge clients for it and get clear contractual language on who handles it and what happens if checks are declined.
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This week I'm going to talk about proven strategies for successfully managing positive pay. If you work with attorneys or law firms as a legal bookkeeper, it's something you're going to run into. And I think even if you don't run into it, you should know what it is so that way you understand the importance of it. Something you might want to actually suggest to a client as you, as you move through the realm of working with law firms. It's, it's definitely an important piece because a lot of times the attorneys have bank accounts that get exposed. You could have an attorney that likes to send out on their invoices the routing and the, and the account number. You might see that it's exposed all over the place. And when that happens, it's, it's an opportunity for the bad people to steal from them. So one of the methods that your client may find if they've had an account hacked is the bank will suggest that they add on positive pay to their bank account. There's a fee that goes along with that. But also there's an extra manual task that comes on our lap most of the time. That the— we have to review what's been processed to be paid. And it's part of it is uploading a spreadsheet to the bank account or manually going in and putting the checks in one at a time to say, yes, these checks are okay to clear the bank. The bank will not clear the checks if they are not approved. So you're manually approving them as you go along. So there are some tools. You can automate this. You can actually automate this with a a report out of QuickBooks. You can format the report. I have a bank that actually shared all the details of what is involved with positive pay, and I'll attach that to this article. So you have a way to look at a PDF. This is specific to one bank, so it might not be something you'll see at every bank. They all kind of have different rules, as you probably know, when you work with different bank accounts. But the importance of positive pay with attorneys is really managing the cash that's going out the door. And approving those checks that are being written. It can be for the trust account, it can be for the operating account, could be for both. Most of the time it is for both. So you really want to make sure that you're managing positive pay effectively and efficiently, because if you don't go on and log in and process these checks at the bank level ahead of time, they're not gonna cash, and then they're gonna be— they're gonna be declined when which looks really bad for your clients. So that's the major reason why you want to make sure that you've got a workflow in place, whether it's you doing it or the client doing it, approving these checks. Like I said, really manual process. If you are going to offer to do that for the client, which we should as bookkeeping professionals, adding that as a feature that we're gonna use, really know how many checks are gonna be happening. 'Cause this is a daily task you're gonna have to add to your day and it's gonna have to be done at a specific window of time. Mm-hmm. You can do it after you process checks to be paid. You can upload a spreadsheet to the bank. So it's ready to— for approval on some banks. Some banks you actually have to go in and manually do it. So know that this is a really manual task that's gonna require your time every single day. You need to charge for that because that's a big amount of time. And it's really— if you don't process it properly, you're going to find that you're gonna have a mess on your hands, and the client's gonna look to you saying, I paid you for this. Why aren't you doing it? So it's really important to spell it out in your contract. But also know what's involved. Make sure you know what's involved before you accept the task of processing these checks because it is really, it's really sometimes very manual and, and it's a pain in the neck basically. But it's done for the right purposes, right? We wanna keep our clients' funds safe at the bank. So is there a way to automate it? Yeah, you probably can create a report. We've got the new reports in QuickBooks. You can kind of build out a report for this. Had a friend that did that. So I will share his video that he makes on that process so that you can see how he created it. Because you might need to lay it out in a different format than the format that we do it on our video. You gotta regularly monitor these accounts. You gotta regularly make sure that they clear, make sure you're on the bank account as a user, and that an accountant user that you get notified if any of these checks bounce out. Maybe they're written for one amount and you put it in for another. If you, because like I said, manual task, that's why you want to really print the checks out of QuickBooks and also create the report out of QuickBooks. It's gonna make it easier. You're gonna need to have really clear communication with the attorney on what checks are being printed. If they're printing them in their office, what are being printed, what are being processed, what day it's happening. It's a lot of work. It's a real lot of work that we should get paid very well for. And it's really a process for us to educate the client on the process and what we feel will be the best process for us. To do this work. Can you ask the attorney to take on this task? Yes. It means their account, their work. But I think that you really need to think about whether you take on the task and how you're gonna charge for it. Because you should pay, charge a lot for it because if something goes wrong and you take on the task, it's gonna be your fault if it doesn't process properly. So know that this is really comes down to security and making really good security measures. Mm-hmm. And I think that if you approach it from that, from that perspective with your client, and let him know, him or her know that this is what it's gonna cost to do that, have you do this task, then they can make the decision whether or not they're gonna take on the, the job or not. Like I said, it's gonna take your morning. So you're gonna have to do it through that little tiny window of time in the morning that it has to be processed. And sometimes that time might not fit in your schedule. So you really need to know that too. And really keep that communication channel open with your attorney anyway. But that's really my best tips on working with positive pay. You'll see it with a lot of the bigger banks have it, and I think you really might want to take a look at the regulations, find out what you're signing up for before you actually put it in to be helpful. And we as accountants always want to help, help, help, help, help, and sometimes to our own detriment. So make sure you are knowing what you're stepping into before you go further and accept that task of positive pay. We'll see you all next week. Bye now. Bye.
