When it comes to ensuring the legitimacy of all credit
applications, there’s no such thing as being too
careful.
Cinque‘s partners Allianz Trade have recently sounded the
alarm on a significant escalation in transactions involving
fraudulent debtors – and, as a valued client, there are two
things we need you to be aware of here:
-
Fraudulent transactions are not covered by standard credit
insurance policies.
-
Credit insurance policies typically stipulate your
responsibilities in guarding against the inherent risks of
extending credit.
What you should do
#1 Treat every transaction as if it was uninsured.
-
Use a continuous, proactive process to identify risks and
evaluate their potential for loss, and incorporate Knowing
Your Customer (KYC) into your credit assessment.
-
Make sure you are familiar with the regulations and laws
governing your business activities in a specific country –
and that you’re fully compliant. (You’ll need to be, if
litigation becomes necessary, so consider seeking legal
advice if you’re unsure.)
#2 Take nothing at face value.
-
Ensure the application is from an official, legitimate
source.
-
Call the customer to verify that the order is valid and
comes from authorised personnel.
-
Visit the applicant’s premises, to confirm its existence
and legitimacy.
- Obtain company registration and VAT documents.
-
Cross-reference supporting documents and debtor
information on the credit application form with
independently sourced credit bureau reports.
#3 Heed red flags.
- Is the applicant’s industry unrelated to yours?
-
Is a new client ordering large volumes, yet reticent to
pay a large deposit in good faith?
-
Is the applicant using WhatsApp instead of issuing formal
written orders and communication?
- Is the applicant‘s email address gmail or yahoo?
-
Are the contact details for the trade references those of
individuals, and are they cellphone numbers, instead of
landline numbers?
-
Is the address of the director the same as the company?
#4 Muscle up.
-
Quanta5 is the ideal business tool to assist in
streamlining your credit management processes and ensuring
that consistent measures are taken to try to prevent
fraud.
-
Our Fraud Check product will provide you with an
additional layer of comfort, with our highly skilled
analysts checking, evaluating and identifying
inconsistencies that may relate to fraud.
If you would like more information on our Fraud Check
product, please contact your Cinque advisor or
info@quanta5.co.za.
