Why Do Companies Get 'Burned' On Scams
Thanks to the Barrett Family and George Barrett at Weekly Hardwood Review for running an article about how lumber companies often lose hundreds of thousands of dollars by falling victim to financial scams.
We want to educate those in the woodworking industry about these types of scams to potentially save your company from being the next victim.
How Do The Scams Work?
One of the current scams going around at the moment starts with a “customer” calling the seller, saying a flooring company was late shaping an order and they needed flooring quickly to complete a contract. The “customer” sends a truck to pick up the lumber while paying with a credit card from a Canadian bank. The seller checked with the bank before sending the flooring out with the “customer.” Later, the bank calls the seller to notify them that the card was fraudulent while the flooring and “customer” are gone. The seller was out the money, which could have been avoided with an accurate credit check.
How to Protect Your Business
All businesses are subject to credit loss at some point, but there are ways to protect your company. Be aware of new and unknown companies who want to purchase quickly and pay a large amount with a credit card.
What to Consider When Making Financial Decisions
In order to protect your business from scams like these, consider the following:
- Be aware of new customers with immediate shipments who pay using a credit card.
- Likewise, be aware of customers who will eagerly pay high prices.
- Use credit references instead of bank references.
- Rely on the credit bureaus for information.
- Be honest about your credit experience.
- Insure your business against credit losses.
- Set and adhere to credit limits for your company.
- Make sure truckers have the proper documentation and have the truckers sign for loads.
- Properly train all sales personnel on the company credit policy.
If you want to protect yourself against scams, take time today to review and update your credit policy. Be sure to inform employees of any changes so they’re up-to-date with your credit policy as well. If you have questions or if you would like more information, contact WMPA’s Philip Bibeau at 978-874-5445.