Preventing Fraud

Nobody appreciates bad debts especially when, with a little care, they are preventable. Recognising and preventing fraud is the start for every business that needs to consider credit risk management.

The following suggestions can help you prevent difficulties occurring in the first place - and mitigate problems if they do.

1. Identify the high risk groups among your potential buyers. Tighten payment terms to this group to reflect the higher risk, resorting to "cash only" in extreme cases.
2. Stay alert for unusual patterns of payment behaviour. If these appear, switch to cash terms immediately.
3. Set up and stick to identity-checking guidelines for any customers who want to collect goods in person, on credit terms.
4. Ask CMR for a credit limit and we'll let you know whether your potential customers are creditworthy or not.
5. Always check large orders with a listed director or the company secretary at the registered office of the company making the purchase.

Preventing fraud - the warning signs

Be on your guard if:

  • Buyers do not seem concerned about the price - since fraudsters have no intention of paying anyway, what does it matter to them?
  • Buyers want to come and collect goods themselves - it saves them having to supply a false delivery address.
  • You receive an unsolicited telephone call advising of a bank transfer - it could be an accomplice making the call.
  • The buyer seems confused, contradictory or just plain ill-informed about their own company.
  • You notice multiple changes of address, management, or stated company activities.
  • A new customer presses you or your staff unnaturally hard for credit terms.
  • The company's title or name seems strange.
  • They provide a phone number for verification - always look up the number yourself.

Preventing Fraud

Share these guidelines with your staff and, if you detect fraud, inform the police immediately.