PlusAdvance, an innovative Italian SME specializing in solutions for working capital optimization, is set to close 2023 with a 165% growth in the volume of invoices managed on its platform.
The Italian fintech company, which in 2023 signed partnerships with leading national and international operators, including BPER and Mastercard, can now count on over 3,500 companies using its services, including dynamic discounting, confirming, invoice selling, reverse factoring, and credit card payments for B2B transactions.
PlusAdvance has conducted a market analysis of Supply Chain Finance, carried out in collaboration with the Supply Chain Finance Observatory of Politecnico di Milano, titled “Il Capitale Circolante e il Ciclo di Cassa delle imprese”. The research considered a sample of nearly 18,000 Italian companies with ATECO code 47, operating in the large-scale retail sector, and with revenues exceeding €500,000 (2021 data). The large-scale retail sector, from a supply chain perspective, is one of the industries showing a significant need to optimize its cash cycles, also through Supply Chain Finance solutions.
According to one of the latest studies conducted by the Politecnico Observatory, the potential market for Supply Chain Finance is estimated to be around €525-585 billion for 2022. The analysis presented here focuses on the key trends in company and supplier payments.
According to the research, the average payment time to suppliers is 74 days, which is lower than the Italian average (around 90 days) but significantly higher than the average collection time, which is around 20 days. This gap allows companies to operate with a negative cash cycle, meaning they generate excess liquidity. This makes companies in the large-scale retail (GDO) sector particularly suited for using Dynamic Discounting, which enables suppliers to accelerate the collection times for their already approved invoices.
The data analyzed by the research also show that the DPO (Days Payable Outstanding), which indicates the average time a company takes to pay its commercial creditors, decreased in 2021 compared to 2020. Furthermore, it highlights that medium-sized (62 days) and large companies (63 days) have the best indicators, even compared to very large enterprises (79 days). Microenterprises, on the other hand, recorded the longest payment times (105 days). This trend has also been supported by the evolution of the regulatory framework, particularly by the stricter regulations introduced by new European legislation.
The DSO (Days Sales Outstanding), which measures the average number of days a company takes to collect payment for a sale, shows that even small (33 days) and micro enterprises (37 days) have indicators significantly lower than the average for small and microenterprises in Italy (three times lower).
Optimizing working capital by accelerating the average collection times is not just a need for smaller suppliers; all companies, including the largest ones, require support in this area given the current macroeconomic context.
Regarding the cash cycle, the research highlights that very large enterprises tend to self-finance their operations. These companies are the most likely to adopt dynamic discounting, as they have liquidity to invest in improving their financial performance. Additionally, they can offer their suppliers the opportunity to improve their average collection times.
This is where Supply Chain Finance solutions come into play, offering a concrete response to efficiently manage payment times, reduce delays, and optimize cash flow management. Companies using our solutions have saved 850,000 days in collecting invoices. This is thanks to the wide range of solutions offered by our platform, including confirming, factoring, reverse factoring, dynamic discounting, and the innovative B2B credit card, which allows companies to use their commercial card programs to make payments to any supplier.
By promoting collaboration between buyers and suppliers, SCF can make supply chains more resilient. Offering financing at more competitive rates and flexible payment mechanisms, these solutions provide businesses with the necessary financial leverage to address inflationary impacts and manage cost increases.
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