[BNPL for Business] The demand for factoring and invoice fintech

The Italian Factoring Association, Assifact, in collaboration with KPMG, conducted a survey on the demand for factoring services among a sample of 106 Italian companies distributed nationwide. The sample is evenly balanced between small and medium-sized enterprises (SMEs) and corporate enterprises, with a greater concentration in northern Italy and in the industrial and service sectors.

The survey examined the needs of the companies, their perceptions of factoring and alternative instruments, the utility of factoring, the quality and levels of service expected and perceived, relationships with intermediaries, the benefits obtained from using factoring, and comparisons with other financial instruments such as bank credit.The survey revealed that over 50% of commercial receivables are collected within 90 days in the domestic market, while 50% of companies pay their suppliers within 60 days (82% within 90 days).

Companies primarily view commercial credit as a tool for maintaining continuous relationships with partners and for synchronizing cash flows. However, working capital management remains tied to primary needs such as ensuring liquidity and avoiding defaults.Integration with platforms offered by financiers is common in the active cycle of working capital, but less so in the passive cycle. Companies show significant interest in a single platform that allows access to various financiers and forms of working capital support.According to the companies, factoring is seen as a complement to bank credit and a way to optimize working capital by removing receivables from the balance sheet and ensuring the success of commercial credits, especially for small businesses. 85% of companies use factoring, and 63% of those that do not are considering it for the future. The relationship with factoring is enduring and repetitive, with frequent and rotating credit assignments. The predominant form of factoring is non-recourse (78%) and maturity (59%).

Companies also use bank advances on invoices and, to a lesser extent, reverse factoring programs. Satisfaction with factoring is high, surpassing other financial solutions. The main advantages are the speed and security of fund disbursement, credit assurance, and professionalism in credit management. The technology offered by factors is perceived as superior to that of banks and alternative finance providers.Companies’ expectations for factoring include reducing service costs, decreasing internal management costs, and better integration with ERP systems. Factoring primarily helps with cash flow planning and managing short-term funds. 42% of companies reported efficiency gains in managing assigned receivables, with small businesses benefiting the most.During the pandemic and post-pandemic period, factoring supported the resumption of productive activities, with an anticipated increase in its use.

The ESG characteristics of the provider are important for almost half of the sample.Lastly, 42% of companies have relationships with public administration, and about half of these assign their receivables through factoring. However, issues in relationships with public administration include credit assignment refusal, lack of communication, and longer payment times compared to B2B. Companies suggest simplifying administrative procedures and removing obstacles to credit assignment to improve relations with public administration.

(Fonte: KPMG)

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