US Receivables Finance Market Experienced its Biggest Increase in Fraud and Business Failure in 2020

EQ Riskfactor, the risk management specialist and part of EQ (Equiniti), launched volume two of its Receivables Finance Global Outlook report series, which is titled “Technology – the route to resilience.”

The report revealed that the U.S. receivables finance market experienced its biggest year-over-year increase in business failure and fraud in 2020. Respondents from the receivables finance industry stated that fraud increased by 63% in the U.S. throughout 2020, more than double the global average of 30%. Similarly, the U.S. receivables finance market experienced the biggest increase in business failures, with 59% of respondents asserting the level had increased in 2020, a stark contrast to the UK, which experienced a 60% decrease in business failures in 2020.  

The report surveyed senior decision-makers from the receivables finance industry across the U.S., the UK, Germany, France and the Netherlands on the impact of the COVID-19 pandemic and how technology is helping tackle the challenges of fraud.

Other key findings included:

• The U.S. and the Netherlands were the only countries where fraud increased; the rest of Europe experienced a decrease in fraud.

• Lenders remain optimistic, as clear signs of economic recovery continue to emerge.

• Investing in technology will be the driving force for future resilience.

“It is worrying that in the U.S., almost two-thirds of respondents saw fraud increase compared to the previous year,” Michael Ellis, managing director of EQ Riskfactor, said. “Respondents also felt that COVID-19 led to greater levels of business failure, with 59% stating it had increased — almost double the global figures. These figures clearly suggest that the U.S.’ most recent $1.9 trillion stimulus package has been allocated to many other purposes rather than exclusively business support. It’s all the more vital therefore for lenders to use technology to mitigate risk and prevent fraud, supporting this with highly trained teams.

“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.