Fraud on the rise – look out!

Anecdotal evidence suggests that fraud within receivables finance*, particularly factoring, is on the rise. While hard evidence to is difficult to come across – factors don’t like to talk about such things – given the current circumstances, this does seem very plausible. Fraud has been evident in past downturns and recessions as businesses struggle to pay bills and wages. In these situations, the temptation to raise invoices before goods or services have been delivered, can be great. Once this happens it can be a slippery slope for factoring clients to the point where completely valueless ‘fresh air’ invoices are being factored. This type of fraud has, unfortunately, been around for a long time. But with the advent of fast developments in technology, new methods of defrauding receivables financiers are being seen. In some cases, very minor adjustments are made to data sets, for example, changing credit terms, in order to hinder fraud discovery (see The  invisible fraud in working capital finance posted on trfnews Nov 20, 2020).

Receivables financiers need to be particularly vigilant at the moment and in the coming months as we (hopefully) begin to recover from the commercial impact of Covid. Those who are not could be in for some painful surprises…

*BCR are holding a Fraud Prevention and Management Virtual Masterclass on Thursday 3rd December 2020, 9.00-13.30 GMT. Don’t miss this opportunity and register here.