Recently on AFP’s discussion boards, treasury and finance professionals discussed check signatures.

A treasury and finance executive asked:

Our corporate checks are currently signed with the treasurer’s digitized signature. However, the treasurer has decided that she doesn’t want her signature “out there” any longer due to fraud concerns. We were considering using our corporate logo, which contains the company name, but determined that would be a problem for the partnership bank accounts that we manage. So we want to come up with something else.

I was wondering if any of you have used or seen additional things used by companies. Is there some type of “security” emblem that might work?

Fred Butterfield, CTP, Trust Company of America, replied:

We changed the standard signature for our highest volume account to a facsimile signature of a non-existent person because of concerns about the signature being reproduced for fraudulent purposes and because of turnover in personnel. We also employ positive pay and reverse positive pay, along with other bank services, to protect our accounts. The bank was a little unsure about it initially, but after some discussions and explanations, they accepted it without further concern. We’ve been doing it for several years now without problems.

We chose the name of a non-existent person because we had had several calls from beneficiaries asking for the signer for one reason or another. Most of those reasons were more readily answered by customer service or treasury. That way, it was much easier to script for the receptionist also, and took much less time to route and resolve the call.

Bruce Lynn, CTP, The Financial Executives Consulting Group LLC, replied:

When considering the use of an authorized signature from anyone on a check it is important to remember to use positive pay. In fact, your bank may insist regardless of who authorizes your check.

An anonymous poster replied:

When our former treasurer retired, we decided to change our facsimile signature to an assumed name.  The conversion went very well. We are now being questioned by one of the state insurance examiners regarding the use of a non-officer authorizing our check payments. Clearly we feel the controls should lie in the underlying systems and the use of positive pay, not in the signature that is system generated on thousands of checks.

[Ed. note: This discussion thread was edited for clarity.]

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For more information, download AFP’s Guide, Not Going Anywhere: Why Checks Still Matter, underwritten by MUFG Union Bank, which examines why so many corporates still use checks, why checks are the payment method most susceptible to fraud, and what treasury professionals can do to protect themselves when paying by check.