Small Business Marketing

Business fraud is a huge problem in South Africa, but it’s not just a local issue: credit fraud is a rising problem worldwide that has been accelerated with digitalization and remote working. Paul’s story is based on identity theft, which is the most common type of business fraud in trade credit. But fraudsters can adopt a number of tactics. The good news is, whichever method they use, there are a number of common red flags that should alert a company’s credit department to a problem. 

The dynamic between a company’s sales force and its credit department often resembles that of rival teams, with one blocking the progress of the other. But, ideally, they should operate like the offense and defense of the same side: one fending off the biggest obstacles on the field, to let the other gain enough ground to score. The team wins when a profitable new customer relationship has been established.

Bad debts are not good for a business. Sometimes, you may have followed all the steps to prevent cash flow problems  and late payment, but you can still be impacted by non-payment. When a customer defaults on its bills or is in danger of doing so, the company extending credit to that customer faces a bad debt expense. The bad debt expense must be charged against your company's accounts receivable and consequently reduces the amount of accounts receivable on your company’s income statement.