Does a challenging or moderately challenging onboarding process correlate with extremely to moderately effective screening procedures?
Maybe—but the numbers might suggest it’s more about working smarter, not harder, and understanding certain tasks associated with onboarding a new customer just might take a long time.
In another question asked in a survey conducted by the Association of Certified Fraud Examiners (ACFE), “How long does it typically take your organization to onboard a new customer?”—16 percent of respondents say more than a month(!), while 24 percent say from 1 week to 1 month. Another 32 percent say 2 to 4 days, 24 percent say 1 to 5 hours, and 4 percent say less than an hour. Wow.
So that’s 40 percent indicating it can take a week or more to onboard a new customer.
If it’s taking more than a week, let alone a month, to onboard, and assuming some of those respondents believe they have effective screening policies, the question becomes—is this really what one would call effective, or is it truly that difficult and such a huge time commitment to limit bad debt?
For Charles Brown, director of credit for grower-shipper Hapco Farms, LLC BB #:104132 in Westhampton Beach, NY, it’s about being as thorough as possible.
He says onboarding a new customer might involve some or all of the following, or even other tools for vetting: “Ensuring a Blue Book listing exists, checking the entity’s status with the Secretary of State, conducting a Uniform Commercial Code and lawsuit check, ensuring an active PACA license exists, communicating with references, and asking for financial statements.”
Ultimately, Brown says, “I say ‘no’ a lot.”
“Saying ‘no’ and thoroughly vetting potential customers until they meet approval criteria can be more challenging but ensures that only trustworthy and credible customers are onboarded,” agrees Yudi Persaud, managing partner at S.K. Cornerstone Group Inc. BB #:209965, a broker in Kingsville, ON. “This rigorous approach reduces the risk of fraud and enhances the company’s security.”
Persaud believes the process can still be quick, efficient, and effective, using the following: “Streamlined verification (implementing quick yet thorough identity and background checks); a user-friendly design (creating an intuitive process that minimizes friction for the customer); technology integration (utilizing automated tools to speed up verification without sacrificing accuracy); and continuous improvement (regularly updating the process to adapt to new threats and improve efficiency).”
This is an excerpt from the Credit and Finance department from the September/October issue of Produce Blueprints magazine. To read the whole issue, click here.
