Over 80% of credit managers not checking for fraud: report

The 2016 survey had a special focus on the prevalence of fraud and its management by respondents, due to the increasing sophistication of cyber threats.

“One of the most alarming findings in this year’s survey was that only one in five credit managers performed a fraud assessment in addition to a credit check and that 40 per cent of respondents were unable to determine whether overdue debt was due to fraud,” Veda’s general manager, commercial risk, Neil Shilbury said.

According to the report, 81 per cent of credit managers indicated that they did not perform a fraud assessment in addition to credit checks. Of the remaining 19 per cent who did perform a fraud assessment, the most common form of check was to determine whether the representative was in fact a director of the company in question (53 per cent).

Mr Shilbury said Veda has actually seen growth in business credit demand in the past six months, which he sees as a reflection of a number of factors in the Australian economy such as the unemployment rate, which has fallen below 6 per cent, and Reserve Bank cuts to the cash rate, which is at an all-time low of 1.5 per cent.

"In response to their more cautious outlook, credit managers have tightened their credit policies, with 26 per cent of participants reducing their credit limits (compared to 16 per cent in 2015) and 64 per cent of respondents increasing collection activity (compared to 70 per cent in 2015)," he said. 

The report highlighted that over the next six months, 43 per cent of credit managers have indicated they plan on enforcing stricter lending credit criteria and the majority of respondents expect to further increase or tighten collections activity.

“The survey also revealed credit managers’ views on the future of the industry. More than half of respondents indicated that automation, better use of data and generally improving processes would be most effective in improving credit management in the future,” Mr Shilbury said.

The majority of the 205 credit managers who participated in the 2016 survey were from the manufacturing, finance and insurance, construction, and wholesale trade industries.

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