Why Start-ups Must Screen their Customers Carefully?

Due diligence is extremely important. Monitoring and screening customers is something that many start-ups overlook. Customer screening doesn’t only help a company comply with regulations, but it also protects the business against issues that could affect the company’s finances and reputation in a negative way. Getting due diligence right can be expensive and usually requires plenty of time and patience, but getting it wrong can cost the business even more, so it should not be something that you ignore. Screening your customers is a start, and is something that all new business should do. Please continue to find out why. 

Keeps a Good Record 

Everything you ever wanted to know about start-ups learn in this article.

Keeping records and evidence of your work should be a part of a monitoring regime for every business.

All businesses are obligated to keep a good record of compliance-related work.

This means that any customer screening should be documented, as well as the decisions made from this record. It is common for printed documents to get lost or damaged in storage.

To protect your records, sorting everything out into a digital document management system or an appropriate shared server is highly recommended for start-ups. 

Customer's screening
Customer’s screening

Protects Business Against Criminals

One of the core purposes of customer screening is to protect the business against suspected or convicted criminals.

The ultimate goal is to find out whether a customer is linked to laundering money, terrorist financing, corruption or bribery, or other types of financial crime.

If they are, then the business can take the necessary steps to avoid these people, which will protect the company in return. To get started, you should look at using cognitohq.com to screen your customers.

This ID verification service is easy to use to reduce fraud and secure your infrastructure, plus more. 

Start-ups: Protects Business Against Criminals
Protects Business Against Criminals

Can Improve Staff Awareness

Many staff who work on the frontline will not understand the risks associated with people who can abuse the business. It is common for a member of staff to not feel confident when it comes to analyzing customer activity and rationale in relation to a specific product, which means they will not be able to detect suspicious activity.

Using customer screening may improve staff awareness, as it will give them a basic understanding of the crimes they are trying to prevent, which is the very least they should know.  

Self- awareness for staffs in Start-ups
Self- awareness for staffs in Start-ups

Creates Sense of Security

It is not uncommon for a business to create a false sense of security about particular customer risk profiles. When a business knows its customers, it can reduce the risk of red flags being overlooked.

Over time, customer risk can change, and a customer that may have been classed as low-risk for a long time may become high-risk due to changes in personal circumstances.

If you don’t screen your customers, then you will not be able to find out these changes until it is too late, which is a common pitfall in many start-ups. 

As you can see, carefully screening your customers correctly as a start-up business is crucial, and although it can be a time-consuming task, it should not be overlooked. It will benefit your company’s finances in the long-run.

Photos: Shutterstock 

Read more about start-ups here. 

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