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Neil Munroe, for credit checker Equifax, says that growing numbers

5th April 2007, Page 62
5th April 2007
Page 62
Page 62, 5th April 2007 — Neil Munroe, for credit checker Equifax, says that growing numbers
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Which of the following most accurately describes the problem?

of business failures and increasing fraud are prompting businesses to use monitoring services more.

Equifax uses Companies House data, County Court Judgments (CCJs), administrations and liquidations reported in various publications such as the London Gazette and sometimes trading information from other organisations with which it has previously done business. Munroe says: 'There are recognised issues with time limits with Companies House. Over the years it has improved substantially. [The information is requested] and then in a matter of hours and days is on [Equifax's] database. But we also supplement it with other information and build up a report that tries to be as wide as possible.'

Equifax offers a monitoring system that keeps companies updated about their long-term contractors. "It's something that people are increasingly aware of," says Munroe. "Time moves on and a firm can vary substantially from one credit check to the next. The other dimension is that credit checks can pick up on potential fraud. Corporate fraud is rife at the moment and there are checks for that."

Recently Equifax began offering a service which looks at a director's personal credit data. It says this can help businesses of all sizes trade more confidently with new start-ups, sole traders and non-limited companies. Reports are volume-driven and can cost from £5 to £40 each depending on usage. knowing the exact name of the company can land you in hot water. "What i.s its registration number?" he says. 'Is it operating as Fred Smith Ltd or Fred Smith (UK) Ltd?"

Clear from the beginning

You must also make sure you know the terms on which you are trading at the very start of your business relationship; make sure they are agreed up front and put down in writing. "If you are in a particular sector, build up contacts and talk to people; get advice about what's going on in the industi-y," says King."Most people use more than one supplier."

An Experian spokeswoman says:"In our experience, around half of all bad debts come from long-standing and regular customers — which is not surprising as companies' circumstances change all the time. Warning signs that a company is in trouble include a change in payment performance, a fall in shareholders funds etc."

However, she adds:"If the warning signs are already apparent, it's probably too late."

Before taking on a customer or supplier, Munroe advises asking for references, and even talking to businesses based nearby to confirm the firm is who it says it is. "I appreciate references can be difficult if you are competing for business, but anyone who is a sound company should not have difficulty volunteering information."

Prevention over cure

Responding to the police operation to smash the fraud ring in the Midlands. Munroe says: "Operation Barber is going to the heart of the problem, but unfortunately many companies have already suffered at the hands of fraudsters. Prevention is most definitely better than cure — and while fraudsters are clever, initial basic checks and ongoing monitoring will at least reduce the risk to businesses." •

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