Factoring for companies in crisis, a potential market of 40 billion

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New areas are opening up for the use of factoring as a relaunch tool for companies in financial crisis: in 2022 there were only 3 billion euros, when a study by Deloitte and Assifact, the Italian Factoring Association, estimates that the demand for this tool Italian companies with a lack of liquidity will offer in 2024 potential market of 40 billion euros, which is a further increase compared to the potential market in 2023 (38 billion) and 2022 (34 billion).

If growth is the prospect, it is used today mainly by medium-sized companies in the manufacturing sector in the financial crisis to gain access to liquidity without resorting to bank debt. But the tool is also effective for supporting smaller companies.

Numbers

This year, the value of the total factoring turnover in Italy, i.e. receivables transferred by companies, should be around 290 billion, according to Assifact’s forecast, to reach around 295 billion next year, compared to 287 billion in 2022. «Operators in the sector, yes, do not expect large fluctuations in volumes after the entire year 2023, but the substantial stability of the support that factoring is able to provide to companies – emphasizes Massimiliano Belingheri, president of Assifact -. There is optimism that growth will resume in 2024, albeit at a moderate pace.” Growth of 4.6% is expected next year.

Financial vulnerability

A report by Deloitte highlights that at the end of the year one company in two could be in a situation of financial vulnerability, compared to 42% in 2019. For Deloitte, factoring solutions serve to support the restart of companies in financial difficulties and also to prevent the risk of failure in the pre-crisis stages. The rate of credit deterioration is thus seen to be increasing and will be 3.8% this year compared to 2.3% in 2022, but factoring companies are able to effectively manage credit risk with the share of non-performing loans on the distressed portfolio in line with traditional factoring. .

“Factoring has proven its ability to be more and more at the side of companies, both in phases of market growth and in situations of negative economic conditions, and to play a role in supporting liquidity, which also proves to be useful for companies in financial difficulties,” recalls Alessandro Carretta, Professor at the University of Rome Tor Vergata and Secretary General Assifact -. However, liquidity alone is often not enough: factoring companies play the role of a real strategic partner, support the management of trade credits, optimize the company’s financial structure, strengthen and develop relationships in the supply chain. In the case of companies in difficulty, the factoring company can also play the role of director of recovery in synergy with other actors involved”.

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