Now is the time to use big data and tackle finance fraud in leasing
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Now is the time to use big data and tackle finance fraud in leasing

Did you know that finance fraud has tripled in the past ten years? Its global losses account to $30 billion in 2020 and are expected to grow hugely in the next few years. Since leasing is a popular way for companies to finance assets such as IT equipment, it should not come as a surprise that leasing fraud is also on the rise. But, there is a solution to this problem that can help you detect fraud before it happens. It can literally save you thousands or even millions of pounds.

Big data is evolving

Big data is important or even essential in today’s business environment. It is a critical decision-making resource, especially for those managing large organisations that have the ambition to become data driven and make more effective business decisions. But with the emerging digital environment also comes the risk of virtual fraud. 

Fraud detection has become indispensable in limiting revenue loss due to fraud. Without it, fraudsters can cause huge damage to organisations. As big data becomes more complex and needs more examination, the necessity of advanced analytics is evident.

Finance fraud in leasing is increasing

Are you buying or are you leasing your IT equipment? Most likely you belong to the latter, since 80% of businesses use financing to acquire equipment.  Leasing has become a popular way for companies to obtain the goods they need. Since the number of leasing companies and leasing contracts signed is increasing, the risk of possible fraud has increased as well.
You might have experienced it yourself, with 1 in 2 companies reporting they have experienced payment fraud in the past two years. 

The network of such frauds usually involves, either conscious or unconsciously, a finance company, a customer and fictious leases or other finance arrangements to obtain money or assets that can be easily exchanged for cash. The fraud is possible when the finance company only does limited research on the necessary documentation and the application for finance. If they do not verify the physical existence of the equipment or legitimacy of the supplier selling the equipment, a false application for finance may be authorised, and equipment stolen and sold on.

Fraudsters: from chief to thief

You might think that your company is in good hands when it comes to fraud detection. You have your trusted employees and protocols that screen customers, so it seems solid, right? Maybe, but don’t be fooled. Finance fraud can often slip past the gatekeepers because of their ability in seeming trustworthy, such as a history of legitimate leases. Moreover, most equipment finance frauds are committed by c-suite officers, statistically the CFO or CEO who have previous work experience with accounting.  So even people that seem the most trustworthy within the company itself, are not always on the same page with you.

Taking the right steps to avoiding fraud

So, how do you tackle such challenges that have huge financial consequences when not done right? And at the same time respond to opportunities that arise? The most essential step is of course: doing a proper background check. Things such as checking customers’ physical addresses, registration details, credit checks and audited accounts analyses are all vital in the KYC process. Often companies only do this once instead of carrying it out periodically, even if the client has made legitimate leases in the past. To truly tackle finance fraud in equipment leasing and also pro-actively preempt potential future fraudsters, you should opt for an approach using big data. 

Using big data and next generation intelligence

Fraud prevention is more than just analysing payment behaviour: it is a combination of analysing risks, knowing the market, combining this with historical and real-time data from companies, and looking at predictive analytics to see how much a business is or can be affected by the current economic climate. All of these help identify the potential for fraud, before it can cause damage to your organisation. Graydon has suitable solutions for all the steps in this process. We make risk analyses and market analyses. But we do more than that. We delve into your organisation: so you know where to get the most profit. And we make sure you can benefit from collaboration, data sharing and our partnerships, to effectively fight fraud. This way you not only protect your business, but you also make it future-proof thanks to the best tools and insights possible.

Go to www.graydon.co.uk to explore how our services can improve your business.

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