Validity of receivables: How can you minimize the biggest risk for factoring?

Continually, factoring providers have to take significant losses due to false debts. Well known examples are the affairs of building speculator Schneider, of Balsam or of Flowtex. For factoring clients, it is almost impossible to assess the risk of false claims. Preventively working validation tools like integrated in fsp.e-processing are promising countermeasures.

Leipzig, 18 November 2014: The most recent case was a multi-million fraud, committed by managers of wholesale bakery “Stauffenberg” (the media reported in September). During summer 2013, they have obtained 6 million euros surreptitiously by fictitious invoices – at the expense of their factoring partner. The company had to file for insolvency; the managing directors have to face charges. Again and again, fictitious invoices for leasing, loans or mortgages cause high defaults for factoring providers.

Preventive systems detect irregularities statistically/heuristically

To minimize client’s risks, false debts have to be detected very early in the process. The module fsp.e-processing by the GmbH therefore integrates a validation tool in the electronic document processing. Based on statistic and heuristic methods, the individual designed reviewing logics and workflows serve for the detection of fictitious invoices. Nevertheless, fraud prevention tools like this are by no means standard for back office solutions for factoring providers. However, financial service institutions value the minimizing of viability risks achieved by fsp.e-processing as a big advantage in competition:
“Safety and reliability are the first priority for our clients and also for us as a bank. has put this excellently into practice.“ Andreas Stegbauer, Director CB Bank GmbH

Due to the statistic and heuristic methods, it is impossible for users to manipulate the system. Invoices are tested irrespective of the amount, if irregularities are detected, several audit procedures take ef-fect: visual checking of the documents, contacting the debtors or confirmation of balance. Another fea-ture simplifies the audit: all original documents are saved during the document processing by fsp.e-processing.

Security with debt validation vs. fast document processing – a contradiction?

Important success factors for factoring software and services are high speed document processing as well as easy and intuitive submission. To reach the unrivalled number of up to 200 documents per mi-nute with reliable fraud prevention in place, sophisticated automated testing mechanisms need to take effect. This is the only way to minimize viability risks while ensuring the efficient and easy workflow of electronic document processing. “To us, the speed of fsp.e-processing was important. Even more important, however, was the provided security, for example through implemented testing mechanisms. That is what makes this solution stand out.” Pia Sauer-Roch, Board of Management Germania Factoring AG

15 financial service institutions already trust in the combination of fast, efficient and intuitive document processing together with the high level of security provided by fsp.e-processing.

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Corporate profile GmbH GmbH is a service company headquartered in Leipzig that caters to financial ser-vice providers. The company acts as a computing and service centre for factoring companies, companies offering procurement financing and centralized invoice clearing providers. The company therefore provides a wide range of financial services on behalf of its customers. Its core area of business includes, for example, debtor management, receivables management, technical processing, limit management, auditing and money laundering prevention. GmbH is a member of the German Federal Factoring Association for Medium-Sized Businesses (BFM) and of the Federal Association of German Debt Collectors (BDIU).

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