Can Fraud Affect Your Business

It’s important to do your due dilligenceFraud Prevention Dark Colorful Elements


Hi, its Ken Mclean from Ken McLean’s Business Journal.
In this week’s blog post I want to talk about how fraud can affect your business.

It’s an ugly truth that there are people out there willing to do almost anything to steal from others and no business is immune, be it from suppliers, customers, on-line or even by employees.

I’d like to begin this week’s podcast to tell you a story about a potential fraud artist I recently came across.  This story illustrates how important it is for all businesses to do their due diligence when dealing with new prospective business.

There are a lot of fraud artists put there that are eager to steal your hard earned cash.

Having been involved in the alternative business finance business for may years, I meet many, many small businesses that are looking for some type of funding.

Usually, if they call me they’ve tapped out all their normal sources of funding. Their business is growing faster than their financial resources can support and they don’t qualify for the products offered by financial institutions such as expanded lines of credit, term loans etc.

Sometimes, that puts them in the desperate for cash category.

So to get on with the story, I get a call from a guy who says he has some invoices he would like to factor from multiple customers.  Factoring invoices allows businesses to realize cash from their current invoices rather than having to wait 30, 60 0or 90 days for their customer to pay them.

He goes on about how he has been in business for a number of years and is a well known and respected and approved distributor of some major products from some very well-known manufacturers.

At this point, I’m thinking, great, this sounds really good and might be an opportunity to obtain a long term client.

I promise to call him back so we can arrange an appointment to get the initial paperwork completed.

In the interim I go on-line and check out his website.

The website confirms most of what he’s told me about his company and his suppliers, and that’s a positive.

Then I do a general search on the company and the principle.

An lo and behold I come across some readily and publicly available information that tells me about two recent lawsuits. That’s not a positive.

One suit is from a factoring company alleging this company submitted and got paid for non-existent invoices while the second lawsuit was from a financial institution for a substantial amount, around $900,000 dollars I think.

So now I’m faced with a decision.

Do I call this guy back and pretend I haven’t found this information, do I confront him directly or do I give him the opportunity to respond to the information I found online?

I chose to ask him directly if he had ever used another factoring company and he replied “No I haven’t.”

I then asked if he had any dealings with the financial company listed as suing his company, himself and other named business partners, to which he again replied “No.”

But, it was immediately apparent that his tone changed with me, he became a little anxious and he seemed unwilling to continue with an open conversation.

So, then I decided to see how far this guy would take things.

I made an appointment to meet him the following Monday.  I went to the address listed on his company website, discovered the company was listed on the building directory, but, there was a new name on the office door in a completely different industry.

The door was locked and nobody answered my knock.

I never did hear from this guy again.

This short story illustrates that fraudsters are out there looking to take your hard earned money and put intro their own pocket.

Don’t let them do it!
It is much easier in todays world of technology to do a little research to find out who you are dealing with in businesses.

Whether you are Buyer, seller, lender or borrower, there is a ton of useful public information online that could include lawsuits, judgements, credit history and profiles on social media sites such as LinkedIn, Facebook, Twitter and others.

Take the time to discover who you are dealing with because you can be sure the person on the other side of the table had likely done some research about you and your company ahead of time as well.

You work hard to make your company successful and earn a decent living so take the time, care and attention to detail about who you are dealing with.

Have you had any experience with people trying to scam your business?  Of so. We’d like to hear your stories so we can share them with our audience.  You can send them to us or simply use the comment section at the end of the podcast.

Thanks for your attention, until next time, this your host, ken McLean wishing you and yours all he best and good fortune.

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