#AUDITDATALEADERS

I was doing anti-fraud training for a group of CEOs of a major French group in China and the lawyer that was helping me was explaining that they should not grant customers extended payment terms.

And they all started laughing. “What’s that got to do with fraud?” “This isn’t relevant”.

Well, at least I wish they did. Actually, they didn’t, they were all half asleep. So at the moment, I got up and I tried to make the point a bit more charismatically. May or may not have worked!

The point is, it was a regular practice for the companies in that group to negotiate with customers by giving them extended payments terms. “You let me pay 180 days and I’ll make sure you win the next call for tender”.

The problem for this one is for the CEO. The CEO signs off the document giving them extended payment terms. The CEO signs off the deal for the next huge sales win.

But under Chinese law, the CEO is liable under the anti-corruption campaign and could face jail. The point is the CEO is making a special offer to the customer and in return is receiving an unfair market advantage.

The danger is heightened by the fact that any employee in his company could report him on the Chinese whistleblower website.

So how do we get those CEOs in the training to wake up and listen to this exciting and crucially important piece of information? Maybe we can’t. Probably they are all corrupt anyway, and in much more obvious ways than that, which might be why they are pretending to sleep.

But if we had a dashboard that showed us the % of customers that get extended payment terms, compared to new deals for those customers over time, then the HQ of the group could give those CEOs a call and wake them up himself.