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Good news! These four simple questions can help you prevent credit fraud from striking your company

by , 23 April 2014
Credit fraud can easily become a problem in your company if you don't check your creditors first. This can lead to serious financial losses and trouble in your company. Stop this from happening to you by asking some important question first. Here are the four questions that you need to ask before giving credit to a possible client.

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Three accounting record risk areas to watch out for
 
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Revealed: The four key questions you should ask new creditors
 
Offering any client credit requires trust and the right information. This is why for a new client you need to ask the right questions to get the right information. 
 
According to experts on the Accounting and Tax Club, you should ask these questions before you go ahead with giving credit:
 
1. How long have you been in business?
This question helps to give you an idea of how stable this client is. If they've been in business for years, they probably know how to manage their finances.
 
2. Can you provide me with other credit references?
Anyone who's lent the money before hand will be able to give you more information about how they handle payments. 
 
3. Are the shareholders of your company willing to sign personal surety for the debt their company incurs?
This will give you some protecting against losing money if the client is trying to commit credit fraud. 
 
4. Can you provide a copy of your latest financial statements?
Seeing a record of the client's financial statement will enable you to see if they have the money to pay you each month. 
 

Get a credit check just to be sure
 
It's vital that you get a credit check done by an outside agent. The client may be committing financial statement fraud as well a showing you false documents. 
 
The Practical Accounting Loose Leaf says that companies do this because of financial difficulties. But free credit checks from a recognised credit bureau will help you spot these inaccuracies. 
 
Use a credit history report and these questions to sport credit fraud before it becomes a problem in your company. 
 
PS: Be invisible to SARS
 
Discover 6 reasons SARS will audit you... And how to avoid attention.
 


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