What is Stop Payment?

Definition

Stop Payment is a banking or treasury instruction to prevent the processing of a previously issued payment, such as a check, electronic transfer, or automated payment. It is used to mitigate errors, prevent unauthorized transactions, or respond to disputes.

Key Features

• Verification Controls: Utilizes Payment Verification Control and Vendor Payment Authorization to ensure that stop payment requests are valid and authorized.

• Automation: Integrated with Payment Automation (Treasury) and Payment Approval Automation to process stop payment requests efficiently and reduce manual intervention.

• Monitoring: Tracks Payment Failure Rate (O2C) and Payment Failure Rate (AR) to identify transactions requiring stop payment and mitigate financial risk.

• Financial Analysis: Supports Customer Payment Behavior Analysis to assess trends and prevent recurring stop payment issues.

• Strategic Payment Management: Aligns with Early Payment Discount Strategy and Early Payment Discount Policy for managing payments with conditional discounts, and accommodates complex settlements like Share-Based Payment (ASC 718 / IFRS 2).

• Payment Channels: Works with Payment Gateway Integration to execute stop payments for electronic transfers securely.

• Internal Controls: Enforces Payment Segregation of Duties to prevent misuse or unauthorized stop payment requests.

Summary

Stop Payment prevents the processing of a payment to address errors, disputes, or unauthorized transactions. Automation, verification, and monitoring ensure accuracy, reduce risk, and maintain strong financial controls.