When related-party sales inflate application revenue · Field Notes

Family-owned companies sometimes route sales through sister entities to present steadier revenue to a lender. On an application, those sales may look like ordinary trade. In the ledger, the same invoices reverse or settle through intercompany accounts with no cash movement.

During a Full Application Integrity Review we pull the top customers and suppliers, then ask which share directors, addresses, or bank signatories with the applicant. Overlap is not automatically improper, but unexplained concentration deserves a finding.

We prefer to quantify the portion of revenue that depends on related parties rather than label the whole file unreliable. Credit officers can then decide whether to underwrite on external sales only.