Business Complexities in Financial Companies

Running head: BUSINESS COMPLEXITIES IN FINANCIAL COMPANIES
Business Complexities in Financial Companies
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1
BUSINESS COMPLEXITIES IN FINANCIAL COMPANIES
Answer:
The analysis of Reliable Finance Company or RFC would reveal several technical and
business complexities as far as its business operations are concerned.
Issue 1: Faulty customer profiling:
The first complexity which one can point out is that the business technique of RFC was
that the company did not maintain proper profiling of customers while offering them asset
products or loan. The study reveals that the company offered loans to farmers and businessmen
whose loan applications were not approved by banks. Thus, one can infer from this that the
business operations of RFC consisted offering loans whose applications banks had rejected in
spite of being financially stronger. This faulty customer profiling resulted in non-realisation of a
large amount of loan each year which caused huge financial losses each year (Martin, Borah and
Palmatier 2017).
Mitigation:
This issue could be mitigated by appropriate profiling of customers. RFC should
consider criteria like financial capacity of the customers, their life style sources of income and
any other ongoing loan before approving their loan requests (Morey, Forbath and Schoop 2015).
Issue 2: Faulty loan received accounting method:
The next business issue which can be pointed out is that faulty documentation and record
keeping between the head office and the branch offices of RFC. The issue also has a technical
angle as well. As pointed above the bulk of the customer base of RFC consisted of agriculturists
and businessmen who made direct payments of instalments to the branch staff. The 20 percent of
the payments which were made online were mailed to the head office for accounting often,