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Bectran Product Team
I
December 25, 2025
8 minutes to read
Credit managers often face a difficult balancing act. On one side, there is the pressure to support sales growth. When a new customer applies for credit, the sales team sees revenue. They want the account open, the limit high, and the shipping routes clear. On the other side, the credit team sees risk. Is this business who they say they are? Can they pay? And, increasingly important, does their location make sense?
In recent years, fraud patterns have shifted. Bad actors are no longer just faking financial data. They are manipulating logistics. They use real business identities (names, tax IDs, and credit references that check out) but they direct shipments to locations that have no logical connection to the business entity.
This creates a specific vulnerability around geography. If a small bakery in Ohio suddenly requests a shipment to a warehouse in Nevada, that is a signal. If a contractor based in Florida opens an account and immediately asks for delivery capabilities across the entire Midwest, that is another signal.
Approving an account is not just about financial capacity. It is about physical verification. Credit teams are finding that limiting the geographic scope of new accounts is one of the most effective ways to stop fraud before inventory leaves the dock.
For many credit departments, the standard process for onboarding a new customer focuses heavily on financial history. You pull a credit report. You check trade references. You verify the bank information. If those come back clean, the account is often opened with broad permissions.
This standard process leaves a gap. It assumes that a valid business entity behaves logically. Fraudsters exploit this assumption. They take over a dormant but valid business identity or mimic a healthy company. Once the credit line is established, they place orders for delivery to multiple states rapidly. By the time the invoice is due, the goods are gone, and the real business owner in the home state claims they never placed the order.
Credit teams managing high-volume accounts realized that granting nationwide shipping privileges to every new customer was a massive exposure point. To combat this, they started restricting where new customers could operate.
Credit managers explain their new control: they have not been letting customers open up all 50 states.
This highlights a shift in strategy. It is no longer enough to set a dollar limit. You must also set a geographic limit. When a customer is new, they are unproven. Allowing them to ship product anywhere in the country immediately is a gamble that many teams can no longer afford to take.
Why does geographic fraud slip through the cracks so easily? The answer lies in how B2B systems and workflows are traditionally designed. Most checks are built to answer "Can they pay?" rather than "Are they really here?"
Most ERP systems are designed to process orders, not police logic. If a customer master file is set up with a $50,000 credit limit, the system generally permits orders up to that amount. It rarely cross-references the ship-to address against the bill-to address in a meaningful way. The system does not flag that a ship-to address is 2,000 miles away from the billing address. It sees a valid customer and a valid product. The order flows through.
In many credit applications, the "Ship-To" field is treated as a logistical detail rather than a risk indicator. The credit team focuses on the "Bill-To" because that is where the money comes from. The operations or logistics team looks at the "Ship-To" only to ensure the truck goes to the right place.
No one owns the responsibility of asking, "Does it make sense for this customer to ship here?" This lack of ownership creates a gap where fraudsters operate. They know that as long as the bill-to address matches the credit card or credit report, the ship-to address is often ignored until the chargeback or non-payment occurs.
The demand for speed exacerbates the problem. Sales teams and customers expect rapid account activation. Taking the time to manually Google Map every ship-to address, verify if it is a residential driveway or a commercial loading dock, and check its distance from the main office takes time. In a manual workflow, these checks are the first to be skipped when volume is high.
Traditional credit checks verify creditworthiness, not identity. A fraudster using a stolen identity will pass a credit check because the victim has good credit. The only discrepancy often lies in the location data: a phone number with a different area code, an IP address from a different country, or a shipping address in a different state. If the process does not specifically isolate and validate location data, the fraudster passes the credit check with ease.
To mitigate this risk, credit teams need to adopt frameworks that treat geography as a primary risk factor. This does not mean stopping legitimate business. It means applying logic to where the business operates.
This approach treats geography like a credit limit. Just as you would not give a new customer a $1 million limit on day one, you should not give them a 50-state shipping footprint on day one.
How it works:
This "crawl, walk, run" approach stops the "bust-out" fraud scheme, where a bad actor maxes out a credit line across multiple states in the first week.
This framework involves a mandatory review trigger based on the discrepancy between billing and shipping locations.
The Logic Checks:
In industries such as construction, shipping to random addresses is common. This makes fraud detection harder. Contractors are authorized to ship to temporary job sites. However, even job sites have paper trails.
The Protocol:
Geography is also about the person. If the application is signed digitally, review the signer's IP address and geolocation.
Implementing location-based rules has a broader strategic impact on the financial health of the company.
Fraudsters do not steal small amounts. They aim for the maximum possible value before they are caught. By limiting the geographic scope, you limit the maximum exposure. If a fraudster can only ship to one state, they can only steal so much before you notice. If they can ship to 50 states, they can place fifty orders simultaneously. Restricting geography acts as a containment wall.
When fraud occurs, you lose money and inventory. In industries with tight supply chains, losing stock to fraudsters means you cannot sell it to paying customers. Location-based rules protect your inventory for legitimate buyers.
Chasing down fraud is expensive. It involves legal teams, collection agencies, and extensive administrative work. It also disrupts the sales team, who lose their commission on the bad deal. By catching the geographic anomaly upfront, you save the entire organization from the downstream chaos of a bad debt write-off.
Forcing a verification of ship-to addresses improves your master data. You end up with clean, verified addresses in your system rather than a mess of unverified locations. This helps the logistics team deliver goods more accurately, reducing failed delivery attempts and return fees.
One of the biggest hurdles to implementing geographic restrictions is internal pushback. Sales teams may view this as a blocker. It is important to frame this not as a "no," but as a "not yet."
Explain that the customer can ship to all 50 states, but they need to establish trust first. Most legitimate businesses understand this. A real business owner in Florida usually has no immediate need to ship to Oregon on day one. If they do, they will have a valid explanation and supporting documentation.
If a customer gets angry or aggressive about a geographic restriction, that reaction itself is often a red flag. Fraudsters rely on urgency and aggression to bypass checks. Legitimate customers are usually willing to provide the necessary context.
By controlling the "where," you gain better control over the "who" and the "how much."
By adding a geographic layer to your credit decision matrix, you close one of the widest open doors for B2B fraud. You ensure that your growth is real, your revenue is secure, and your products end up in the hands of customers who actually intend to pay for them.
Ready to stop geographic fraud before it happens? Bectran's credit application system flags ship-to addresses that don't match billing locations, automatically restricts new customers to home-state shipping, and validates residential vs. commercial addresses, catching fraud before inventory leaves the dock. See how Bectran's fraud prevention works.
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