Credit Matters Blog


Kim Radok 05 September 2018


Recently, PwC * produced an article advising that customer fraud was Australia’s top economic crime. The sad reality is that one of the greatest frauds worldwide yesterday, today and probably tomorrow, is perpetrated by customers. This type of fraud can generally only be completed successfully because of the vested interests of management and other employees.

History shows us time and time again, when the causes of loss by fraud is properly researched, inevitably the causes are found to be as a result of the actions or inaction of managers and employees. When the correct procedures, quality employees and the right reward structures are in place and supported by an ethical organisational culture, customer fraud is quickly exposed and rarely occurs.

The employees which usually see the first signs of B2B customer originated fraud are your credit management, accounts receivable and customer service employees. Unfortunately, these employees are also often the most marginalised in the organisation when it comes to their perceived value to the business.

In addition, management often does not take kindly to reports and information which show up their inefficiencies and operating systems which they have endorsed and created.

There are two more negative perspectives when management’s pride comes before the welfare of the business.

First, the firm’s other employees switch off caring because they understand that management is simply not concerned about the possibility of further customer fraud if it is going to affect management’s interests.

Secondly, customers learn they can continue to commit fraud, almost without penalty.

In either situation, the business will suffer losses which can lead to the demise of the business if allowed to go unchecked.

Make no mistake, the creditor today is without government and bureaucratic friends who have robbed them of their rights and have empowered customers to commit fraud.

Until management understands the modern commercial environment regarding B2B credit, any failings in their business’s operations, operating philosophies and the culture of the business, will only lead to further customer fraud.

* Durkin, Patrick, Customer fraud Australia’s top economic crime: PwC AFR 24/7/2018.