TODAY, technology forms an integral part of most businesses in helping to make quick and accurate financial decisions. The extent to which companies employ the use of technology varies depending on a company’s growth plans, the nature of its business, its customers and management’s trust of the Internet. The last 10 years has witnessed an upsurge in the number of companies using online banking technology to automate a vast quantity of daily transactions, and introduce new options for the way companies do business. One major advantage is that online banking is cheaper. Electronic processing is less expensive than physically clearing cheques and automated transactions are cheaper still. The payment cycle is also reduced as online banking executes transactions quicker, meaning money is available sooner to the recipient and is out of the payer’s account immediately. A harsh and sometimes fatal reality in business is the ‘lost in the post’ occurrence. In an online world, payments never get lost by the Royal Mail and it’s nearly impossible to fake sending a payment if you haven’t actually sent it. Online banking sites never close at the ‘end of the day’, so you can process transactions any time and initiate a regular payment system, so minimising the number of payments you need to ‘chase up’ or process each month. Despite this widespread use of online banking technology, there are still plenty of managers and directors with reservations. For many businesses the greatest hurdle to online banking is trust. Certain entry-level sites are password driven and, once the password is compromised, full access to account details becomes available, funds can be transferred and passwords changed to enable future access. To forestall this, secure internal processes and firewalls can be built in, but identity fraud still remains a threat. The major banks are now beginning to improve security access through other methods such as security keys, random number generators and multiple authority and access levels. Many banks introduce daily limits to cushion themselves and clients against fraud. This reduces flexibility as everyone may not be able to be paid in one payment run or large payments may need to be broken down, thus compromising internal controls. Also, whilst bank mandates often include joint signatories, only one person may be required for online banking log on, possibly raising certain legal issues when the company becomes exposed. Legislation is also driving towards more online payments with all Government departments, such as VAT and PAYE, committed to accepting only electronic payments within the next few years. Online banking is convenient but, to enhance security, companies should apply commonsense rules of regularly reconciling accounts, checking unidentified items and unauthorised bank charges, as well as keeping accurate records within the company. John McDonald is part of the North-East team of e-Financial Management Limited. | 
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