In this edition of ‘Receivable Only’ we’re focussing on receivables data manipulation and the hidden world of white-collar fraud.

Across all our receivables programs, we process in excess of 1 million invoices a night.  These range from invoices processed for trade credit insurance purposes to invoices considered for receivables-backed funding eligibility through to invoices analysed purely for portfolio analysis and credit monitoring reporting.  Regardless of why they’re being provided, every invoice generally has the same characteristics – debtor details, an issue date, a due date, a value and a close date if closed.

As a rule, we expect first to receive details of a new invoice overnight following the invoice issue, and then we’d expect to see updates to that invoice as payments or credits are allocated towards the invoice closure when we’d expect to also receive a close date. There are legitimate circumstances when we might see other forms of invoice update, such as correction of provided details being one, but this tends to happen early in the life of an invoice.  Due date extension within a maximum extension period is another, but this assumes the underlying insurance policy has an MEP provision. 

In a certain sense, Aronova is a bit like a credit card company in that we track each and every invoice during its lifetime, automatically look for trends or suspicious invoice behaviour, and, for years, provide our insurance, funding, and credit monitoring partners with ‘anomaly reporting’ — the identification of potentially suspicious invoice behaviour.

The scenario we see most is where a corporate has a trade credit insurance policy with a maximum credit period clause that restricts insurance to those invoices with, for example, a maximum tenor of 90 days.  We receive an invoice with a 90-day tenor, and assuming there’s capacity within the aggregate tests, we process this invoice as “insured”, and the policy beneficiary trades on the basis that the policy covers the invoice. 

A few days later, we get an update to the invoice that extends the due date by 15 days, which now breaches the 90-day maximum tenor restriction.  We can now invalidate the insurance on this invoice from a trade credit insurance perspective. However, what if the policy is being used to support a receivables finance program and the invoice has already been sold?  There’s no simple solution, mandatory repurchase is certainly an option, but things are starting to get messy.

This is just one of the many examples we see where suspicious data change is occurring, and in some programs, we’re not talking about the odd change here or there, but wide-scale, repeated changes.  There’s often a fine line between genuine data correction, approved due date extensions, and more sinister data manipulation.  We all rely on accurate and trustworthy data to make decisions, power AI, operate programs and to drive increasing levels of business automation, but with this comes perils and the often hidden world of white collar fraud.

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