TECHNOLOGY
Why Escrow is the Safer Option for Small and Medium Scale Businesses
Why Escrow is the Safer Option for Small and Medium Scale Businesses
In the business sector, regardless of the size of business or the volume of transaction, ensuring a secure and reliable transactions is paramount. Small and medium-sized businesses (SMEs) often encounter certain difficulties when it comes to carrying out online transactions. This is because they may not have the same amount of resources and infrastructure as larger companies. This is where the role of escrow services becomes increasingly important.
Small and medium-sized businesses face a significant risk of fraudulent transactions, payment disputes, and other financial challenges that can seriously harm their growth and stability. This is mainly due to their limited resources and tight budgets. Fortunately, there is a time-tested solution that offers a protective shield for SMEs known as escrow. In this article, we’ll look into why using escrow is a safer choice for small and medium-sized businesses.
What is Escrow?
An escrow is a convenient arrangement used by many businesses, in which a trusted third party temporarily holds the assets involved in a transaction. The assets are kept safe in a separate account until both sides fulfill the terms and conditions of the agreement. This setup adds extra protection and security for everyone involved. The main goal of an escrow is to make sure that all parties meet their obligations. It acts as a fair mediator, making sure that the assets are only transferred when all the agreed-upon terms are met.
When it comes to online transactions, it can be challenging to know if you can trust the other person involved. To address this concern, licensed online third-party services offer escrow services to safeguard both buyers and sellers. These services act as intermediaries, ensuring that the transaction proceeds safely without any complications or fraud. Once both parties have fulfilled their obligations as stated in their agreed terms, the online escrow provider completes the transaction by transferring the funds to the seller.
Benefits of Escrow for Small & Medium Scale Businesses
Escrow services can provide several benefits for small and medium-scale businesses. Here are some of the key advantages:
1. Mitigating Financial Risks
For SMEs, every transaction carries a certain level of financial risk. This can be particularly challenging when dealing with new customers or unknown vendors. Escrow services act as a neutral third party, holding funds until both parties fulfill their obligations. By using escrow, SMEs can significantly mitigate the risk of non-payment or non-delivery, ensuring that they receive the agreed-upon payment or goods before releasing the funds. This helps safeguard the financial interests of SMEs and minimizes potential losses.
2. Protecting Against Online Fraud and Scams
The online marketplace can be a breeding ground for fraud and scams, and this can cause serious damage to small and medium-sized businesses. Fake listings, non-delivery of goods, and unauthorized chargebacks are just a few examples of fraudulent activities that SMBs may encounter. Escrow services provide a crucial layer of protection by verifying transactions and ensuring that funds are securely held until the buyer receives and approves the merchandise. This significantly reduces the risk of falling victim to fraudulent schemes and helps SMEs maintain their financial stability.
- Establishing Trust with Customers
Building trust is paramount for SMEs seeking to establish a solid reputation in the market. When customers perceive a business as trustworthy, they are more likely to do business with them again and again. By utilizing escrow services, SMEs demonstrate their commitment to secure transactions and customer satisfaction. Customers feel reassured knowing that their payments are held in escrow until they receive the products or services as promised. This trust-building aspect of escrow services can significantly benefit small and medium-scale businesses.
4. Streamlining Transactions and Reducing Administrative Burden
Running an SME often means wearing multiple hats and managing various aspects of the business simultaneously. Escrow services can help alleviate some of the administrative burden associated with financial transactions. By providing a structured and standardized process, escrow services simplify the transaction workflow. SMEs can focus on their core operations while relying on the escrow service to handle the intricacies of payment verification, dispute resolution, and fund release. This streamlining of transactions frees up valuable time and resources for SMEs to focus on growth and innovation.
5. Dispute Resolution
Disputes can arise in any business transaction, and SMEs are not immune to such challenges. Escrow services offer a structured mechanism for resolving disputes, providing a fair and impartial platform for both parties to present their cases. Small and medium-sized enterprises (SMEs) can benefit from using an escrow service to handle disputes more efficiently and affordably. This approach reduces disruptions to business operations and maintains positive relationships with customers and suppliers.
6. Facilitating Business Expansion
Escrow services play a crucial role in facilitating the growth and expansion of SMEs. As businesses expand their customer base and engage in larger transactions, the potential risks also increase. Escrow acts as a safeguard, allowing SMEs to enter into bigger deals with confidence. This financial security encourages SMEs to take calculated risks, explore new opportunities, and expand their operations.
7. International Trade Facilitation
For businesses engaged in international trade, escrow services can be particularly advantageous. They can assist in reducing risks that come with international transactions, like dealing with different currencies, following regulations, and managing shipping processes. Escrow services can provide a secure and efficient mechanism for conducting international business, fostering confidence and reducing uncertainties.
8. Financing Assistance
Escrow services can also support businesses in securing financing or loans. By holding assets or collateral in escrow, businesses can demonstrate their commitment to fulfilling financial obligations, increasing their credibility and improving their chances of obtaining favorable financing terms.
How to Select the Best Escrow Service for your Business
Choosing the right escrow service for your business is crucial to ensure your financial transactions are secure and go smoothly. With numerous options available, it’s important to consider several factors before making your decision. Here are some key factors to consider when selecting an escrow service for your business:
1. Accreditation, Reliability, and Insurance
First and foremost, make sure that the escrow service you choose is properly licensed and accredited. Take some time to carefully look into the information provided and confirm the legitimacy of the company you’ll be dealing with. Additionally, consider the location and licensing of the company. Some countries have stringent standards for granting business licenses, which adds credibility to the service.
2. User-Friendliness
The usability of the escrow service is crucial. If the web interface is confusing and you find yourself unsure of which stage you are at, it becomes difficult to utilize the service effectively. It is essential to understand how the system operates. Opting for a digital escrow service offers the added advantage of conducting all transactions online, eliminating the need to physically submit documents to a bank. This convenience is particularly valuable during the ongoing Covid-19 pandemic, where movement restrictions are prevalent in many regions.
3. Flexibility
Flexibility plays a vital role, especially when engaging in international transactions. Quick and flexible payment options are key to expediting deals. The ability to make payments in your local currency and and foreign currencies will offer significant advantages to your business and broaden your customer base.
4. Niche Expertise
Different industries require specialized escrow services tailored to their unique needs. Whether it’s real estate, website transactions, cross-border import/export, or general purposes, it’s important to select an escrow service aligned with your industry. Niche expertise is valuable because it indicates that the escrow provider understands the specific challenges of your industry and can address them effectively. For example, if you operate in e-commerce trade, Kusnap or Peppa should be your preferred escrow service. Dealing with generalists may prove more challenging as they might not have a comprehensive understanding of your business requirements.
5. Communication
Effective communication is vital when choosing any business partner or service, and escrow is no exception. Before encountering a crisis situation, test the responsiveness and relevance of the service’s customer support. Prompt and competent communication from the escrow service representative enhances the overall value of the service.
6. Reviews and Reputation
Choosing the right escrow service for your business is really important, and their reputation matters a lot. It’s crucial to ensure that the escrow service you choose operates with integrity and has a solid reputation. Take the time to research and read customer reviews about the company to gauge the satisfaction levels of previous clients. Opt for an escrow service that is known for its professionalism, attention to detail, ethical practices, and strong reputation. This way, you can be confident that you’ll get the high-quality service you deserve.
Conclusion
Escrow services are a great choice for small and medium-scale businesses as they provide a safer and more reliable way to handle transactions. By mitigating financial risks, protecting against fraud and scams, building trust with customers and suppliers, streamlining transactions, and facilitating dispute resolution, escrow services empower SMEs to navigate the complexities of the business world with confidence. Embracing escrow as a preferred method for financial transactions can help SMEs safeguard their interests, foster growth, and establish a reputation for trustworthiness in the marketplace.
More from my site
TECHNOLOGY
Europe’s Network and Information Security (NIS2) directive raises the stakes for African businesses to comply with European Union’s (EU) cyber security standards
The European Union’s NIS2 cyber security directive has significant implications for African businesses trading with the continent. This is according to Check Point Software Technologies (www.CheckPoint.com), a leading AI-powered cloud-delivered cyber security provider, which urges African businesses with strong ties to the EU to take steps to comply with this new, stringent cyber security regulation.
The European Union’s NIS2 Directive, came into effect this month and requires member states to amend their national legislation. The NIS2 Directive imposes strict cyber security requirements, including enhanced management liability, reporting to authorities, risk management, and business continuity planning, placing African companies trading with the EU under increased scrutiny.
CheckPoint-NIS2-infographic-EN (1)
The NIS2 Directive builds upon the original NIS1 Directive introduced in 2016, expanding its scope to cover a wider range of sectors including Energy, Banking, Transport, Digital Infrastructure, Healthcare, Food Production, and Research. More than 80% of European enterprises are now within the scope of this legislation, which extends to global supply chain partners—including many businesses in Africa.
Collins Emadau, Check Point Partner and Director at Westcon, explains, “Europe is still Africa’s leading trading partner. African businesses, particularly in leading economies such as South Africa, Kenya, and Nigeria, need to understand the far-reaching impact of NIS2. Compliance is not just about meeting EU standards—it’s about securing their future in a globalised market. Failure to comply will result in not only heavy fines but also the potential loss of critical trade partnerships with EU member states.”
What’s at Stake for African Businesses?
The EU remains the largest trading partner for Africa, with over 18 Economic Partnership Agreements and trade worth billions annually. African businesses, especially in sectors like Energy, Banking, Transport, and Manufacturing, are key partners in the EU’s supply chains. To continue doing business with EU companies, African organisations must comply with NIS2, which mandates strict cyber security measures to protect critical infrastructure and supply chains.
Issam El Haddioui, Head of Security Sales Engineering: Africa, Check Point Software Technologies, says, “NIS2 sets a new standard for cyber security, and African businesses must act now. Many organisations are unaware of the depth of these requirements, which go beyond local regulations. Compliance is essential not only for maintaining business relationships with the EU but also for enhancing the overall resilience of African economies against cyber threats.”
Compliance will exact a cost for African organisations, which according to Interpol’s 2021 Africa Cyberthreat Assessment Report, spends an average of only 0.05% of their revenue on cyber security, far below the global average of 0.3-0.5%. The Report also estimated the financial impact of cyber crime in the region at over $4 billion USD, representing about 10 percent of Africa’s total GDP.
Tougher Penalties and Personal Responsibility
NIS2 introduces personal liability for business leaders in the event of a cyber attack, meaning that executives themselves can be held financially accountable for breaches. Penalties include fines of up to EUR 7 million or 1.4% of a company’s global annual turnover, whichever is higher. This goes beyond the GDPR, placing even more responsibility on corporate leadership to ensure robust cyber security practices are in place.
NIS2 mandates that organisations must report cyber incidents to authorities promptly and inform their stakeholders, suppliers, and customers. Therefore, African businesses must ensure they have a comprehensive incident response plan in place, along with regular cyber security training for both IT and leadership teams.
Steps for African Businesses to Ensure Compliance
To successfully implement NIS2 and avoid devastating penalties, Check Point recommends the following four steps for African businesses:
- Knowledge: Business leaders must gain a basic understanding of cyber security to effectively communicate with their IT teams and ensure sound decision-making.
- People: Establish an agile IT security department, including key roles such as a Data Protection Officer (DPO) and a Chief Information Security Officer (CISO), to manage and distribute responsibilities efficiently.
- Audit: Conduct regular risk assessments and audits to identify and mitigate vulnerabilities. Continuous monitoring is essential to stay compliant with evolving threats.
- Incident Management: Develop clear procedures for responding to cyber incidents, including swift reporting to national authorities, suppliers, and stakeholders.
Long-Term Commitment to Cyber Security
Compliance with NIS2 is not a one-time process; it requires a long-term commitment to cyber security. From 2028, organisations will be required to annually document their NIS2-compliant IT infrastructure and demonstrate that their cyber security measures are aligned with the latest technological advancements.
“African countries, especially economic leaders like South Africa, Kenya, and Nigeria, should also consider using the NIS2 framework as a model for strengthening their own national cyber security regulations. By improving cyber-readiness, African businesses can not only comply with international standards but also protect their data, operations, and reputations from evolving threats,” El Haddioui continues.
El Haddioui, concludes, “The NIS2 Directive marks a significant shift in the cyber security landscape. African business leaders must recognise that cyber security is now a matter of survival, not just compliance. By taking proactive measures, they can safeguard their future, avoid heavy penalties, and ensure their organisations thrive in an increasingly interconnected global economy.”
CheckPoint-NIS2-infographic-EN (1)
More from my site
TECHNOLOGY
VFS Global appointed to roll out Australian biometric collection centres in Sub-Saharan Africa
With the recent addition of Sub-Saharan Africa and Europe, VFS Global has become the exclusive biometrics collection service provider to Australian visa applicants across all nine regions globally.
CAPE TOWN, South Africa, October 16, 2024/ —
Services to be rolled out at 12 locations in seven countries in Sub-Saharan Africa by February 2025
VFS Global becomes the exclusive biometric collection service provider for Australian applicants in all the nine regions globally – Americas, Europe, Mekong, Middle East and North Africa, Pacific, South Asia, South East Asia, North Asia, Sub-Saharan Africa
Core services include Biometric Collection and Identity Verification, Digital Assistance with online visa applications submission and Online Payment Assistance.
Additional (as required services) include remote interview hosting, document and claim checking, paper digitisation and local addressing and document delivery.
The Department of Home Affairs, Australia has appointed VFS Global to provide biometric collection services for Sub-Saharan Africa. VFS Global is the world’s leading outsourcing and technology service specialist for governments and diplomatic missions. This is in addition to the seven regions awarded in August 2023 to provide biometric collection services –the Americas, Mekong, Middle East and North Africa, North Asia, Pacific, South Asia and Southeast Asia. With the recent addition of Sub-Saharan Africa and Europe, VFS Global has become the exclusive biometrics collection service provider to Australian visa applicants across all nine regions globally.
The Sub-Saharan Africa region includes seven countries in total with Australian Biometric Collection Centre services to be rolled out at 12 locations in 13 countries by February 2025. This includes setting up Centres in Ethiopia, Ghana, Kenya, Nigeria, South Africa, Uganda and Zimbabwe.
According to the agreement, VFS Global’s core services include Biometric Collection and Identity Verification, Digital Assistance with online visa applications submission and Online Payment Assistance on the Department’s ImmiAccount portal. The company would also provide additional (as required services) such as remote interview hosting, document and claim checking, paper digitisation and local addressing and document delivery.
“We are pleased to extend our Agreement with VFS Global to include Europe and Sub-Saharan Africa. We will continue to work closely with VFS Global to ensure the delivery of high-quality biometric collection and visa support services for our visa applicants worldwide.” said Anthony Phillips, Director Offshore Service Delivery Partners Section, Department of Home Affairs.
“Securing these two regions is a testament to our dedication, expertise, commitment to excellence, and trusted partnership with the Department of Home Affairs, Australia. This decision not only reflects our ability to meet highest standards but also reinforces our resolve to deliver innovative solutions. Under the Department’s guidance, we will continue to elevate the experience of Australian applicants across the world,” said Jiten Vyas, Chief Commercial Officer and Head of Business Development, VFS Global.
Distributed by APO Group on behalf of VFS Global.
More from my site
ENVIRONMENT
Nigerian Company MMNL to invest $50 Million to scale up its Tubular Batteries Production to 100,000 with backward integration in Next 5 years
Metal Manufacturing Nigeria Limited (MMNL); also ventures into multiple business verticals in backward & forward integration and into the Mining segment to stay ahead of its competitors
To cater to the rapidly growing demand of Nigeria’s energy sector; Metal Manufacturing Nigeria Limited (MMNL), Nigeria’s largest tubular battery company is aiming to double its expansion capacity to 60,000 pcs per Month in the next financial year. The company is planning to invest around $50 million in capacity expansion, new greenfield projects in the energy backup segment, R&D, Mining & Beneficiation, Plastic container and carton manufacturing units along with brand building and channel partner engagement to accelerate its ambitious growth target.
Being the First Company to produce the Tubular Batteries in Nigeria; MMNL have had its fair share of challenges & hurdles. Over the past 5 years, MMNL has conquered several obstacles including a lack of skilled manpower, a duopoly of supply chain vendors, hurdle of sourcing raw materials, unstable power supply, exorbitant hike in electricity tariff & gasoline price and machinery and scarcity of spare parts in the region. Despite of providing thousands of employments of opportunity; battery manufacturing sector is struggling for survival and desperately in need of government policy support such as raising import duty of foreign importers and export duty for raw materials.
These problems would often demoralize and demotivate any company in tubular battery manufacturing sector and make it unviable for any business to operate in such a situation. Despite their 14 years of manufacturing experience in Nigeria, it found itself in a despondent situation which has led the company to explore other verticals to optimize the supply chain cycle. MMNL has taken several initiatives to address the stated challenges. For example, to address the issue of lack of skilled manpower, the company has conducted hundreds of technical training sessions to locals to enhance & upgrade their skill set and it is continuing to invest in manpower training. Similarly to ensure a steady supply of raw materials, the company has ventured into the mining business, beneficiation plant and other business verticals like plastic container & carton manufacturing. The company has also launched its dedicated service centre to resolve customer issues.
“Despite several challenges; the company has achieved stable production of 30,000 units per Month by 2024. MMNL is proud of the fact that it is the first & only Made-in-Nigeria inverter battery company which dominates over 35% to 40% of market share. It means every 5 batteries sold in Nigeria; 2 batteries are from MMNL”, said Mr. Amit Kumar, CEO of Metal Manufacturing Nigeria Limited. “As an Industry leader; company is continuously striving to delight the customer with quality and innovation in the product and making significant contributions in local employment opportunity as well as saving foreign exchange”
MMNL is bound to focus on completing its end-to-end supply chain cycle with a backward and forward integration expansion to proliferate its growth plan and to survive in the highly volatile environment. MMNL has already invested $25 million in Battery production, lead & Oxide manufacturing plant in Shagamu, Ogun state. MMNL’s current production capacity is 30,000 units of inverter batteries. Company is all set to boost its battery production capacity to 60,000 at the start of the new financial year and over 100,000 production capacity by opening a new battery greenfield production plant by 2027-2028 along with backward integration including lead-zinc ore mining and beneficiation.
To make the brand available and accessible for the end customers across Nigeria, MMNL is also expanding geographically across the country, forging multi-channel partnerships, executing its retail strategy and to make use of eCommerce & digital channels.
Being an Industry leader with 14 years of manufacturing experience in Nigeria; MMNL has certainly created a high entry barrier for both existing and new players which are considering to start their tubular battery manufacturing operation. Metal Manufacturing Nigeria Limited is a shining example of how a true leader can sail through turbulence of political, economical, social & technological hurdles.
About Metal Manufacturing Nigeria Limited (MMNL)
Metal Manufacturing Nigeria Limited (MMNL) is the largest tubular battery manufacturing company. MMNL is the most trusted and ‘Proudly Made in Nigeria’ brand with over 14 years of industry experience. Recently; MMNL won 3 awards in a row 1) ECOWAS Inverter Battery Company of the Year 2) ECOWAS Inverter Battery Manufacturing Company of the year and 3) ECOWAS Renewable Company of the year. MMNL provides over 1000 direct and indirect local employment opportunities.
The Company also got pioneer status accreditation from Nigerian Investment Promotion Commission (NIPC). Currently MMNL is present across 6 major locations along with a strong network of channel partners consisting 3000+ Installers, 1000+ Dealers and 100+ Distributors and over a half million of satisfied & happy customers.
More from my site
-
EDUCATION3 years ago
Jamb Cut-Off Mark for A Law Degree in Nigerian Universities
-
BANKING2 years ago
POLARIS Bank Transfer Code| How to Activate the USSD Banking Code
-
BANKING2 years ago
Union Bank Transfer Code| How to Activate the USSD Banking Code
-
BANKING2 years ago
FIRST Bank Transfer Code| How to Activate the USSD Banking Code
-
BANKING2 years ago
How to Check UBA Account Balance From Anywhere
-
BANKING2 years ago
GT Bank Transfer Code| How to Activate the USSD Banking Code
-
BANKING2 years ago
Check GTB Account Balance via Internet and USSD Code
-
BANKING2 years ago
ZENITH Bank Transfer Code| How to Activate the USSD Banking Code