New global receivables finance report shows impact of Covid-19 on fraud across Europe and US
EQ Riskfactor, the risk management specialist and part of EQ (Equiniti plc), today launches volume 2 of its global outlook report series – “Technology – the route to resilience”.
The report surveyed senior decision makers from the receivables finance industry across the UK, US, Germany, France and the Netherlands on the impact of Covid-19, and how technology is helping tackle the challenges of fraud.
Significantly, 60% of UK industry respondents stated that business failure had decreased between 2019 and 2020 – the greatest decline of all countries surveyed. In dramatic contrast, the US recorded the biggest increase in business failure at 59%. Industry commentators suspect the UK’s outperformance likely reflects levels of government support masking the financial pressures of many businesses.
Similarly, respondents reported that fraud plummeted by 68% in the UK through 2020 – an improvement of approximately a third (29%) on the rest of the world, where fraud decreased by an average of 39%. Most respondents across European countries also reported a decrease in fraud, though the trend reversed in the US with fraudulent activity rising by 63%.
Other key findings from the report include:
– Fraud decreased across Europe, with exception of the Netherlands where it increased by 40%
– Lenders remain optimistic as clear signs of economic recovery continue to emerge
– Investing in technology will be the driving force for future resilience
Michael Ellis, managing director of EQ Riskfactor, comments:
“It is worrying that globally, a third of respondents saw fraud increase compared to the previous year. This makes it all the more vital for lenders to use technology to mitigate risk and prevent fraud, supported by highly trained teams.
“While there are positive signs of declining business failure and fraud in the UK, the speedy roll-out of government stimuli such as furlough extended a lifeline to many so-called “zombie” businesses that may mean when this support is withdrawn, we’ll see a harsher picture of the real financial impact on these businesses.
“Receivables finance is the perfect vehicle to support ongoing economic recovery, as businesses unlock working capital for their growth. This need for capital, coupled with government support coming to an end, creates ideal conditions for increased fraud – and unsurprisingly, our report clearly shows this to be a growing threat.”
The full report is available to read and download here: