New data on the Italian SCF market shows it was worth around €530 billion in 2017, based on the receivables for more than 760,000 Italian companies. These figures were presented by Professor Federico Caniato, director of the SCF Observatory, speaking at the organisation’s sixth annual conference in March.

With inventories at €387 billion (net of €87 billion of advanced payments for orders) and payables at €493 billion, net operating working capital for the year was €420 billion.

A breakdown of the market by categories in 2017 confirms that the majority of business consists of invoice discounting and factoring. However, solutions such as reverse factoring and invoice auctioning are growing and helping to reshape the market.

Figure 1: Potential and served SCF market in Italy

 

The Italian SCF market is poised for further growth, with dynamic discounting and purchase order finance only starting to make some tangible traction in 2018.

Italy represents the second most attractive market in Europe in terms of SCF potential, representing about 14 percent (estimate considers the overall turnover of Italian companies) of the region’s market. At the end of 2017 the total European market – i.e. estimated total turnover of European companies – was worth about €4500 billion.

 

Figure 2: Potential SCF Market in Europe (on 31/12/2017)

 

The SCF Observatory, at the Politecnico di Milano School of Management, which represents the main academic viewpoint in Italy on supply chain finance, has strengthened over the years through its collaboration with the SCF Community and other leading European universities interested in this topic.

The congress opened last month with an introduction from Professor Alessandro Perego, head of Politecnico di Milano’s school of management, who talked about the rising interest in supply chain finance and awareness of its benefits against a backdrop of a worsening economy.

Professor Stefano Ronchi gave a presentation about the current economic situation and the work of the Supply Chain Finance Observatory.

Dr Mauro Prignoli, head of finance at the scooter and motorcycle manufacturer Gruppo Piaggio also spoke at the congress, outlining the SCF solutions his company have implemented in Italy and elsewhere.

Antonella Moretto, co-director of the Supply Chain Finance Observatory, talked about how collaboration can be a competitive advantage for the supply chain finance industry. She presented research that outlined forms of collaborations in Italy and elsewhere.

Specifically, the research focused on the Chinese market and identified four different archetypes of collaborative approach between new and traditional players. These were:

  • The all-inclusive SCF platform
  • The strategic SCF platform
  • The guaranteed SCF platform
  • The E-merchants SCF platform

Moretto added there were four distinct ways of collaborating in Italy and in other countries. These were:

  • Financial provider with other providers (information provider, technological provider)
  • Info/tech provider with another/other Info/Tech provider(s)
  • Financial provider with another/other financial provider(s)
  • Financial provider with associations/focal company

Gilberto Della Rovere, CFO at Sacmi Forni and Mirco Capra, head of sales at the same company, spoke to attendees about how they organised a purchase order finance solution by working alongside both a financial provider and platform provider.

Fabio Fritelli, group finance director at Maire Tecnimont, gave a presentation on how reverse factoring can help general contractors manage fluctuations in cash flows.

Professor Caniato presented fresh research into how SCF solutions could be used to support both large companies and the SME sector.

This was a topic explored further by Carlo Carlotto, CEO at Alpitel, who presented a case study where a reverse factoring solution was set up with an investment fund, which allowed more micro-enterprises supplying Alpitel to be included in the programme.

Andrea Nascimbeni, president at Caseificio 4 Madonne, told attendees how alternative financing solutions – including short-term mini bonds – helped the company grow in terms of both revenue and profit.

Antonella Moretto discussed digital supply chain finance, talking through research on the use of disruptive technologies, such as Blockchain, IoT, API, Artificial Intelligence and Big Data Analytics. The technology was explored both in terms of its role in flow matching and automation and in reducing operational and credit risks in supply chains.

Alberto Marchesi, head of finance and treasury at Gruppo Sapio, and Fabrizio Guerra, procurement manager at Gruppo Sapio, gave a case-study on how they implemented a dynamic discounting solution with the help of an Italian start-up.

Michiel Steeman, executive director of the SCF Community, closed the conference with his keynote speech on the circular economy.

Professor Caniato brought the event to an end with three conclusions:

  • Italian Supply Chain Finance is converging with worldwide trends, and global supply chain finance is approaching Italy
  • Complementary solutions, enabled by disruptive technologies, will bring expected benefits
  • Supply chain finance is no longer a toy just for large enterprises, but also SMEs are understanding and adopting it