Bank account name matching best practice

Bank account name matching is currently on the agenda for most organisations, and the not-for-profit and charity sectors are not immune to the process. In short, verifying that the account name on record aligns with the intended payee or donor’s name before completing a transaction should be standard practice. NFPs and charities are at risk when mistaken or fraudulent payments divert funds away from the mission. Secondly, misallocating donations can lead to time-consuming confusion or even compliance issues.

Until recently, most Australian banks processed transfers using BSB and account numbers. Under this system, a transfer could be concluded even if the account name was incorrect. This opened the door for scammers impersonating suppliers and even charities. For NFPs and charities, the move by financial institutions to add name matching to transactions is a welcome safeguard.

For NFPs and charities, there are four primary benefits of name matching.

• Firstly, it provides improved fraud protection. Verifying account names helps stop payment diversion scams and invoice fraud. A name mismatch can raise a red flag if a scammer tries to trick you into paying for a false invoice.
• An additional layer of compliance. While added layers of administrative process can feel annoying, auditors and regulators welcome quality governance regarding an NFP’s funds.
• Financial reconciliation is easier and more accurate when the names on your bank transactions match your internal records. Fewer obscure transactions provide a cleaner audit trail.
• Enhanced donor trust is always an asset. Donors are wary and must be reassured that the organisation is compliant and trustworthy when handling money. Name matching demonstrates the organisation’s commitment to transparency and diligent financial processes.

Many NFPs and charities are implementing new procedures to embrace name matching in their financial workflows.

• When you add a new vendor or staff member’s bank account to your payment system, verify the account name, especially if it is not the same as the vendor or staff member’s trading name or publicly known name. Contact the supplier directly (using a trusted contact method) to confirm their account name and details. This ensures you have the correct information from the beginning.
• Update your policy to reflect that at least two authorised people must review and approve any outgoing payment. Dual authorisation mitigates the risk of a single person making a mistake and provides oversight to identify mismatches.
• Use available technology to aid account name matching. Many online banking platforms now offer name checking services such as “Confirmation of Payee.” This feature alerts you if the entered account name doesn’t match the account holder’s. If your bank provides this, incorporate it into your payment process.
• Maintain an internal list of verified account names for all your regular payees, such as staff, suppliers, partner organisations, and known donors who give via bank transfer. Regularly update your records and remove any outdated accounts.
• Educate your finance team about the importance of account name matching. Update your financial procedures so verification is a built-in step.

Consistency is key. When paying bills, your accounts payable workflow should always include an account name check before funds are released. When receiving funds, especially larger donations or grants via bank transfer, have a procedure to confirm the sender’s identity if something looks unusual, for instance, if the account name on a deposit doesn’t match the donor’s name on file. These practices help prevent potential fraud or mistakes and signal to stakeholders that your organisation is diligent and professional.

At Accounting For Good, we work with NFP organisations with a turnover of $1M or more.

Contact us if your organisation needs expert financial guidance. Let us handle your accounting needs so you can focus on what matters most: serving your community and driving positive change.