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Front Foot Fraud Prevention In The US

Front Foot Fraud Prevention In The US

28 July 2021

Moving From Reactive To Proactive Risk Management

In an EQ Riskfactor survey across the US and Europe in late 2020, we asked receivables finance professionals whether fraud had increased, decreased or levelled out in 2020, compared to 2019.


Far higher than results from Europe, 62% of US respondents felt that fraud had increased. 59% of US lenders also thought client debtor or business failure had increased – again, much higher than their European counterparts.

This is particularly concerning, as many US businesses and their employees have been cushioned by a huge government stimulus package. At some point this will need to be withdrawn. In a bid to bridge any potential new funding gaps, businesses might be tempted to start manipulating their receivables finance facilities. This is when lenders could see a spike in this fraudulent activity. Now, more than ever, lenders need to reduce their risk exposure through a proactive, technology-led strategy.

Leveraging Technology To Fight Fraud

By automating their processes, and through detailed trend analysis, receivables finance lenders can swiftly identify any indicators of fraudulent financial manipulation.

It helps to make smarter decisions. This is even more important where support has come in the form of loan payments deferral; which businesses have benefitted from over the course of the pandemic. These loans will eventually need to to be paid back. In this case, lenders will need detailed analysis to monitor the re-payments. The financial metrics that lenders are using will also need to be re-baselined.

MICHAEL Michael Ellis Managing Director, EQ Riskfactor

“By having the right data sets, lenders can minimise their own risk exposure, capitalise on economic growth and better serve their customers – particularly businesses with growing order books but immediate cash flow challenges,” says Michael Ellis, Managing Director, EQ Riskfactor.

“Through special algorithms, lenders can spot and flag any adverse trends, identify deteriorating collateral profiles and any indicators of fraud. And because of the scalable nature of automation technologies, lenders can take on and manage more clients without bearing additional risk.”

Knowledge Is King

It is crucial to have a detailed understanding of your client’s financial circumstances to ensure the right lending decision is made. Data plays a significant role in this. However, with endless data sources available it can often result in information overload. We believe it is important that your systems present the right people with the right information at the right time.


Technology alone is not enough. Lenders must rollout extensive fraud training and awareness programmes for employees – relationship managers, risk managers, credit and client-facing teams – to help them understand that technology works to their benefit, and to navigate the risks and opportunities of the economic recovery.

By its very nature, the receivables finance model lends itself perfectly to supporting business resilience as global economies unlock and invoicing activity increases. Anti-fraud technology will enable the receivables finance industry to thrive and support economic recovery, even in times of adversity.

More About The Report

Volume 2 of the EQ Riskfactor Receivables Finance Global Outlook report, Technology – The Route To Resilience is out now.

It provides fascinating insights around sustaining future growth in the post-COVID recovery. Each volume of the report will explore different aspects of the study, revisiting views, opinions and analysis.

Read The Full Report Here

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