Improving the check acceptance process is a goal for many athletic associations and leagues. Here at Engage Sports, we find that “pay-by-check” is still a significant part of the registration process; in some cases it is the only method of payment used, while in others, mixed payments (credit cards and checks) are accepted for either the entire registration process or parts (work duty deposit).
As this recent New York Post article points out, youth sports associations are not exempt from fraud and theft. In this case, the treasurer of a Manhattan youth baseball league was arrested and charged with stealing over $90,000. As such, the same prudent financial controls that apply to business must be applied to a youth sports association, and perhaps more so.
While checks have been accepted for years, they require special care and attention. Recently we spoke with our friends at Fuse Financial Partners to learn more about preventing fraud and abuse when accepting checks.
Why checks are unsafe.
- A check contains all the information needed to take money from the checking account (routing info, account info, personal name, address, and of course the signature too!).
- A check is usually written in ink and can be "washed" and re-used. A good fraudster can erase the "TO" and "AMOUNT" info and fill in whatever they want.
- A check leaves very little data trail in the accepting organization (your folks), so it may simply disappear from your office without a trace!
To reduce your risk of fraud and financial exposure, Fuse Financial Partners and Engage Sports recommends the following steps:
Implement Online Registration with Credit Card and Check Acceptance.
Our main recommendation it to replace checks entirely with some of today's simple alternatives. When done correctly, all payments can be deposited directly into the bank and never go through any handling at all.
The easiest is to implement an online registration process, such as Engage Sports, that accepts credit cards. Many banks (and even QuickBooks) offer electronic check processing -- also called ACH that can eliminate paper check handling.
Another system that's easy to set up at your bank is to accept payments by text or email. It's true - a member can send you an electronic payment just by texting you from their phone -- a process that gives you the notification of payment, and deposits their payment directly into your bank with a full trail of where it came from and when. For details, visit your banking website or branch and ask about the new payment methods available to you.
Proper Check Handling Procedures.
If your association must continue to accept checks, then Fuse recommends the following time-tested procedures.
- Have one trusted person dedicated to opening the mail.
- That person creates a "payment log" -- a list of all check payments accepted
- Scan the checks using a check scanner or iPhone immediately (or go to the bank daily)
- Have a different person apply the checks to the customer accounts in your accounting system
- Do not allow the checks to sit around the office
- Have a third person review the "open A/R" and make calls to delinquent customers.
- Encourage your staff to go on vacation once in a while -- this can uncover all kinds of things!
We recognize in a volunteer led organization, that having multiple staff to accept checks may not be feasible. As such, do the best you can with the staff available and have at least two individuals involved in the core responsibilities of receiving checks separated from depositing checks.
Change at the Treasurer Position
Lastly, we believe that it is important that the treasurer position be changed on a regular basis, every 3-4 years if possible. Many athletic association board positions have 1-2 year terms, with the treasurer having a longer term at 2-3 years. This is because the treasurer position is highly specialized and it can often take extra time to learn the duties and find capable, willing replacements. However, in some volunteer led associations, there is very little turnover at the board level. While this creates stability, as the New York Post article shows, it can also create situations where fraud begins to fester as the people in power begin to take advantage of the lack of oversight. If the treasurer position cannot be changed with regularity, then have two people authorized with bank access and hold regular joint reviews of the monthly bank transactions. As Ronald Reagan famously said, “trust but verify.”
Following the above steps takes leadership and is the responsibility of the board and the association members to enforce. If the treasurer is not taking these steps, it is the responsibility of the board president and other officers to enforce, including removing the treasure if that person fails to implement such procedures. If the board is not providing the necessary leadership and financial protection, then it is the responsibility of the athletic association members to elect board officials that will act to implement financial protections. It’s their money, after all, that is at risk.