Invoice collection periods for firms with turnover up to 5 million euros affect 98% of companies

The average invoice collection period in Romania for companies with a turnover of up to five million euros is 158 days, affecting over 98% of all businesses in the local market, according to a specialized study conducted by Instant Factoring, the first fintech factoring platform in Romania.

According to national business statistics, the share of short-term liabilities recorded by companies to suppliers is 55%, and the average debt ratio for companies with a turnover of up to five million euros is 75%. In Romania, firms with a turnover of up to 5 million euros account for over 98% of all businesses and represent 26% of the total turnover of all companies.

The share of short-term liabilities in total company debt has increased by about 15% in recent years, from 58% in 2008 to 73% in 2015. The sectors most affected by payment delays and collection periods exceeding 120 days are construction, distribution, agriculture, transport, metallurgy, and business services, according to the study by Instant Factoring, the first fintech factoring platform in Romania.

"Statistics on invoice collection periods and the debts recorded by Romanian companies are worrying. Firms face financing difficulties, and micro-enterprises and SMEs are the most exposed to this phenomenon, as they are the ones most in need of liquidity to operate. The risks companies face due to these figures are related to short-term cash flow destabilization. Most companies face a major discrepancy between the short payment terms for their own suppliers and the long collection periods from their customers. During these intervals, a company's cash resources are limited, which can lead to payment difficulties or even hinder the company's growth and development, as it lacks the resources to fulfill new orders," say representatives of the fintech factoring platform.

Analyses reveal that over 90% of banking institutions in Romania do not accept small or newly established firms for financing. Banks offer financing solutions that are far too inflexible for the needs of small businesses, and long response times, bureaucratic approval processes, and the requirement for collateral discourage companies from attempting to access financing.

According to specialists at the fintech factoring platform, the lack of automation in certain internal bank processes and workflows means that, in most cases, the return obtained from financing a small company does not encourage this type of lending.

In this context, Instant Factoring aims to turn any invoice worth up to 10,000 lei (VAT included) that has at least seven days and at most 120 days until maturity into cash in less than 24 hours, using fintech technology. After the client uploads the invoice to the platform, they receive a positive or negative response within two hours, and within 24 hours of a positive response, the bank transfer is made to their account, without the need for any other documents. The cost of the service is a single fee of 3% per month of the total invoice amount.

➡️ Read the full article on economica.net: https://www.economica.net/termenul-de-incasare-a-facturilor-pentru-firmele-cu-afaceri-pana-la-5-milioane-euro-afecteaza-98prc-din-companii_152897.html