Asset Financing – How to Avoid Fraud
There’s no doubt about it; UK firms are increasingly inclined to seek out alternative methods of financing in the current climate.
This is primarily due to the fact that just four out of 10 SMEs were able to secure funding from their preferred lender in 2017, with a further 34% claiming that they capital made available to them was insufficient.
This has made funding vehicles via ways such as asset financing increasingly popular, as businesses turn away from traditional lenders in their droves.
Asset financing enables firms to access assets such as vehicles, equipment and machinery, while it can also be used to release cash from the value of assets that you already own.
In order to use this effectively, however, it’s crucial that you tread carefully and avoid instances of asset fraud. We’ll discuss this below and ask how you can stay safe.
3 Ways to Avoid Asset Financing Fraud
In 2017 alone, fraud cost the UK economy an estimated £190 billion. Asset fraud remains a key contributor to this, and it remains a key threat to anyone seeking commercial or Corporate Asset Finance.
With this in mind, here are three steps to help you minimise this risk and leverage asset financing safely.
Research Sellers Extensively
This may be an obvious point, but it can also be overlooked by startup ventures and inexperienced SMEs. Make no mistake; if you’re looking to purchase an asset, it’s crucial that you research the seller at length if you’re to avoid potential fraud.
To achieve this, you can use platforms such as HPI and Companies House, which include detailed information on registered businesses, their accounts and trading history.
Similarly, you can leverage credit referencing agencies to research suppliers and their credentials, highlighting any previous issues that they’ve experienced in the process.
Make Sure that the Asset is fit for Purpose
It’s also important that you guarantee the integrity of each individual asset, as otherwise, you may end up acquiring something that offers absolutely no value for money.
To achieve this, it may be worth appointing an independent and accredited expert in the relevant field, who has the expertise to make a full assessment. This can be an engineer or a mechanic depending on the asset in question, but the important thing is that you review its functionality and overall capacity.
This small precaution can make a big difference, while preventing you from securing funding for poor quality assets.
Take Care when Sharing your Personal Details
While asset fraud may be a threat in its own right, there are a number of general rules that can be applied when protecting yourself against the machinations of potential thieves.
You should never share payment details or sensitive information over email, for example, particularly when dealing with new suppliers or potential sellers.
If you’re dealing with more trusted suppliers, you should avoid communicating or sharing data information over a public, unsecured network. You should also refrain from using platforms on which data could be intercepted, as this also places you at the risk of being a fraud victim.
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