Paul is sitting at his desk in a makeshift office in South Africa. He has no funds and no clients, but he does have a laptop with an internet connection. And that’s all he needs to trick businesses out of hundreds of thousands of dollars.
First, he finds his target companies: chemical producers that are covered by trade credit insurance. Then, he identifies a major buyer in his targets’ industry: a pharmaceutical company for which Paul can easily obtain financials and contact information. He prepares a standard credit application pack in the pharmaceutical company’s name and sends it to all his targets, who happily fulfill the orders as they’re covered by their respective insurers.
Two months later, Paul has long since received his goods and sold them on the black market, but the invoices are still outstanding. His contact details turn out to be dead ends. And when the chemical producers reach out through the pharmaceutical company’s official website, what do you know? They’ve never heard of Paul.
I see scenarios like this on a regular basis. And the kicker to this story is that the unpaid invoice will not be covered by trade credit insurers, because most policies don’t cover a sale when goods have been delivered to a different company than the one stated on the invoice.
First, he finds his target companies: chemical producers that are covered by trade credit insurance. Then, he identifies a major buyer in his targets’ industry: a pharmaceutical company for which Paul can easily obtain financials and contact information. He prepares a standard credit application pack in the pharmaceutical company’s name and sends it to all his targets, who happily fulfill the orders as they’re covered by their respective insurers.
Two months later, Paul has long since received his goods and sold them on the black market, but the invoices are still outstanding. His contact details turn out to be dead ends. And when the chemical producers reach out through the pharmaceutical company’s official website, what do you know? They’ve never heard of Paul.
I see scenarios like this on a regular basis. And the kicker to this story is that the unpaid invoice will not be covered by trade credit insurers, because most policies don’t cover a sale when goods have been delivered to a different company than the one stated on the invoice.