banks
Another government email scam!
Thursday, September 1st, 2011 | consulting | No Comments
Our firm’s junk email filter caught another government email scam. This one appears to come from the FDIC, the federal bank watchdog, with the subject “FDIC: about your business accounts”. It hints that your bank (which it does not name) is being taken over, and provides a link for more info on how your accounts will be affected. I did not click the link (and you shouldn’t either). I suspect that the linked site asks for your banking information.
You can be sure that the FDIC (or any other government agency) will not ask in an email for your personal information. We cannot think of any circumstance under which the government would initiate electronic communication with you without your prior permission.
Always be alert to possible scams from the government or any other unexpected source. If you’re not sure about the verity of an email, you are welcome to call us and ask about it. If you are not sure about the identity of the sender, do not click a link in an email.
Protecting your business from such dangers is just one of the many ways we help you keep your company on track to greater success.
IMPORTANT: ACH Phishing Alert
Monday, February 28th, 2011 | consulting | No Comments
The Electronic Payments Association has received reports that individuals and/or companies have received a fraudulent email that has the appearance of having been sent from NACHA and signed by a non-existent NACHA employee. Specifically, this email claims to be from the “Electronic Payments Association” and appears to be coming from the email address “payments@nacha.org.” These fake e-mails falsely state that recently sent ACH (Automated Clearing House) transactions have been canceled by the Electronic Payments Association.
NACHA does not send communications to individuals or organizations about individual ACH transactions that they originate or receive. If you receive an email from NACHA that states that your ACH transaction has been canceled, please do not respond to the email, open any attachments, or follow any link. Be on the lookout for similar emails as well. You can find more information at the NACHA website.
In a previous post, we explained the risks of an ACH scammer targeting your business bank account. Businesses do not enjoy the same protections afforded consumers. Once a criminal has access to your banking information, your account can be cleaned out before you know it. Call us to discuss this and other ways to protect your cash.
Avoid 1099 requirement
Thursday, February 10th, 2011 | consulting, tax | No Comments
The new credit card reporting rule has created a potential money-saving opportunity for businesses subject to 1099 reporting. Everyone engaged in a trade or business (including landlords beginning in 2011) must report payments of $600 or more to non-corporate service providers on Form 1099 to the payees and the IRS. Beginning January 1, 2011, banks and online payment networks are required to report credit card sales to participating merchants and the IRS on Form 1099-K.
The combination of these two rules created the specter of duplicate 1099s and a processing nightmare for payees receiving payments by credit card. The IRS has issued a regulation that exempts payments reported on Form 1099-K from duplicate reporting (e.g., on Form 1099-MISC). So if businesses and landlords pay their service providers by debit or credit card, they may be able to avoid the expense of issuing and filing Forms 1099.
If you are a service provider who normally receives Forms 1099 from your customers, you may see this new regulation as an opportunity to enhance your relationships and your cash flow by setting yourself up to accept debit and credit card payments. Payment networks charge a fee for processing transactions, but the process is easier than ever. Processing options even extend to smartphones, so you can process payments immediately at the work site. That sure beats the thirty- to sixty-day cycle of traditional invoicing and billing.
Guard against electronic funds transfer fraud
Monday, November 8th, 2010 | consulting | 1 Comment
Your business, like many others, may receive and pay out funds through electronic funds transfer (EFT) and automated clearing house (ACH) transactions. Such transactions include converting paper checks to electronic payments, wiring funds, and paying taxes electronically. The frequency of EFT fraud and the size of losses have increased as cybercriminals are targeting small and medium-size businesses who have inadequate protection.
Unlike consumers, who are well-protected against ACH fraud, businesses must notify their banks within two days of a fraudulent ACH transaction or the business may be liable for the loss. Wire transfer fraud demands detection within hours. So discovering and responding to unauthorized EFT is time-critical.
Typically, a business establishes the means to conduct online EFT transactions with a financial institution. The bank has controls in place that authenticate the computer being used to initiate the process. If the computer is not recognized, another layer of security is activated, such as a security question. Once the authentication process is completed, the bank assumes that the transaction is legitimate because it originates from the authenticated computer.
The cybercriminal subverts the authentication process by installing malicious software hidden in an email attachment, web browser download, or file transfer. This malware captures keystrokes to log bank account information, credentials, and online activity such as EFT transactions. The user is usually unaware that the computer has been compromised. Then the criminal hijacks the victim’s computer to conduct the fraudulent EFT transaction, which the bank’s system sees as legitimate because it recognizes the computer. The criminal transfers most or all of the funds in the account by wire transfers under $10,000 each to avoid currency transaction reports that would detect the activity.
The bank is required to make its best effort to recover the funds, hopefully by reversing the transfer. The business often has no recourse against the bank because the bank’s security system authenticated the victim’s computer. Thus the payment order appears to be legitimate, and the bank is protected by the Uniform Commercial Code, especially if the fraud can be traced to a security breach in the victim’s computer (the malware or hijacking program). Wire transfers are difficult to recover because they are instantaneous. ACH transactions usually take longer because of the intermediary clearinghouse used to complete the transaction, thus increasing the possibility of intervention.
You can take a number of steps to minimize your risk of EFT fraud:
- Install firewall, antivirus, and malware protection on all computer systems, especially those used for online banking.
- Dedicate a computer for online banking with robust authentication features.
- Reconcile EFT transactions daily.
- Use a dedicated bank account and make sufficient “just-in-time” deposits into that account before a transfer occurs.
Contact us to learn more about these and other internal controls to safeguard your business against various forms of fraud, from within or outside your company.
Banks Ease Small Business Lending Standards
Thursday, August 19th, 2010 | consulting | No Comments
Banks have begun to loosen their credit standards for the first time since 2006, according to the latest survey by the Federal Reserve. The quarterly survey of senior loan officers indicated a slight easing of credit standards and most terms on commercial and industrial loans to firms of all sizes. This is the first survey since late 2006 to show an easing of standards on loans to small firms.
The survey respondents pointed to increased competition in various loan categories as a reason for the easing. Demand for such loans among firms of all sizes changed little last quarter after having dropped in the April reporting period. In contrast, credit card loan standards tightened slightly.
Locally, we are hearing that banks are increasingly flexible and more aggressive in working with their clients to create lending packages that are good fits. This is a welcome change from the last two to three years, when lenders were dealing with their own recession-related problems. While some banks are still wrestling with their loan portfolios, others appear to have worked through their issues. They now are devoting more resources to serving existing clients and attracting new ones.
This is good news for companies that need credit to keep their operations moving forward. For businesses that are in a position to take advantage of opportunities amid the carnage of the recession, many banks are more willing now to lend their support.
Small business lending changes
Thursday, June 24th, 2010 | consulting | No Comments
The financial reform bills currently in Congress are being reconciled in conference in hopes of passage by July 4. Also in the works is an appropriation of $30 billion for banks to lend to small businesses. But will small businesses see that money? Is that what they need to survive the recession? The metrics to answer these questions, and thereby allow Congress to craft legislation that does what it intends, range from hazy to nonexistent, according to this report from Bloomberg BusinessWeek. Bank data indicate that while overall lending fell over the past two years, lending to small businesses fell more than twice as much. Because banks are not required to report small business lending in detail, no one can tell whether the reason is the banks’ unwillingness to lend, the companies’ poor creditworthiness, or a lack of demand for small business loans.
We are hearing now from some banks (not all) that they have money to lend to creditworthy companies with good histories and solid plans for using the money (such as commercial real estate with leases already in place). Their credit analysts are beginning to listen again to the stories behind the numbers rather than focusing solely on whather the loans will pass muster with the regulators. We are also hearing from business owners who would much rather have more revenue than more borrowed money that they are not sure they can pay back in the current economy.
Those business owners who are applying for commercial credit are finding a higher level of scrutiny into their personal financial hstory, as this article explains. Because small business loans are often granted subject to the personal guarantee of the owner, lenders are placing greater emphasis on subjective measures relating to the owner’s character. They are going back to the old days when the banker’s mantra was, get to know your client as a person before you decide whether to extend the loan. These days, they have plenty of ways to quantify creditworthiness, but that one-to-one relationship is becoming important again.
If you are considering applying for credit, here are some things to remember:
- Deal with a banker who knows you (let’s hope you’ve already been working on this one).
- Work up a detailed plan for how you will use the money and how this use will increase your capacity to pay back the loan.
- Have your business and personal financial ducks in a row. Check your credit reports and make sure they are accurate.
- Organize your tax returns and other financial information so your lender has a complete, easy-to-follow set of data.
- Try to anticipate the lender’s questions and concerns so you can respond without being caught off guard and convey the sense that you are aware and in control.