Title: Electronic Credit Invoices Revolutionizing Financing for SMEs
Subtitle: Fintech platforms play a crucial role in driving awareness and growth
Date: June 19, 2023
In recent years, electronic credit invoices have emerged as a powerful financing tool for small and medium-sized enterprises (SMEs) in Argentina. While still not reaching the volumes handled by promissory notes or deferred payment checks, experts predict that the gap will continue to narrow in the coming years. This article explores the benefits of electronic credit invoices and the role of fintech platforms in driving their adoption and growth.
Unlike traditional checks, SMEs that discount a credit invoice can access similar rates without taking on final payment responsibilities or consuming bank credit. The responsibility for payment lies with the larger company, providing SMEs with a more secure and efficient financing option. It is estimated that over 220,000 SMEs issue close to $1 billion in electronic credit invoices each month to 1,220 large companies in Argentina, indicating significant potential for future growth.
However, the main challenge hindering the dynamism of electronic credit invoices is the lack of awareness among SMEs about their financial possibilities. Many SMEs are unaware that with just a few clicks, they can access funds on the same day. As a result, they end up paying higher financial costs than necessary. Hernán Visconti, executive director and founder of Bill Group, emphasized the crucial role of fintech platforms in disseminating information about electronic credit invoices. While the existing trading and settlement process provided by the MAV (Mercado Argentino de Valores) is robust, fintech platforms can provide additional value to SMEs by offering reports and advice on which invoices will yield better rates, enabling SMEs to advance liquidity for purchasing merchandise or supplies.
The Argentine Fintech Chamber predicts a significant increase in the volume of electronic credit invoice operations in 2023. Fintech companies dedicated to advising and discounting these instruments expect a growth rate of 175%, reaching $120 billion in operations. This growth is driven by the fact that any small or medium-sized business, including self-employed professionals, consultants, or advisors, can discount an electronic credit invoice regardless of their credit score or billing level. Additionally, being classified as an “SME product,” electronic credit invoices allow access to preferential rates without affecting current credit lines.
One of the advantages of electronic credit invoices is that they can be traded through the MAV or sold directly to banks and non-financial credit providers by fintech platforms. Financial institutions, mutuals, and cooperatives are increasingly interested in these instruments due to their good profitability-risk relationship, as the final payers of the invoices are large companies.
Pablo Sanucci, president of Invoitrade, believes that electronic credit invoices will gradually replace traditional check discount operations within the next 3 to 4 years. Large companies recognize the convenience of accepting invoices rather than paying by check. Sanucci also highlights the need for application authorities to reduce the acceptance period for invoices from 21 days to the legally established 15 days. This change would allow companies with 30-day payment terms to offer their suppliers the opportunity to discount the instrument.
While some large companies still need to modify their payment systems to fully embrace electronic credit invoices, many are already making the transition. The benefits of having an accepted invoice that can be negotiated without endorsement or guarantee of payment by the supplier outweigh the limitations of checks, which require suppliers to consume their bank lines.
In conclusion, electronic credit invoices are revolutionizing financing for SMEs in Argentina. With the support of fintech platforms, these invoices provide SMEs with a secure and efficient financing option, allowing them to access funds quickly and at competitive rates. As awareness grows and more SMEs embrace electronic credit invoices, the financing landscape is expected to undergo significant transformation in the coming years.
Note: The content provided in the query is used as inspiration for the news article.
How can fintech platforms better educate SMEs about the benefits and cost savings associated with electronic credit invoices, and what role can they play in optimizing financing options for SMEs
Financing rates and terms, further incentivizing their adoption.
Fintech platforms play a crucial role in driving awareness and growth of electronic credit invoices. Platforms like InvoiNet in Argentina serve as open marketplaces for reverse factoring electronic invoice financing. They connect suppliers and buyers, allowing SMEs to easily access funding by discounting their credit invoices. These platforms provide a convenient and efficient way for SMEs to connect with larger companies and secure financing without the need for traditional bank credit.
One of the key benefits of electronic credit invoices is that SMEs can access funds on the same day, providing them with much-needed liquidity for purchasing merchandise or supplies. However, many SMEs are unaware of this possibility and end up paying higher financial costs than necessary. Fintech platforms can bridge this gap by offering reports and advice on which invoices will yield better rates, helping SMEs make informed decisions and optimize their financing options.
The potential for growth in electronic credit invoice operations in Argentina is significant. With over 220,000 SMEs issuing close to $1 billion in electronic credit invoices each month to 1,220 large companies, there is ample room for expansion. The Argentine Fintech Chamber predicts a 175% growth rate in these operations in 2023, reaching $120 billion.
In conclusion, electronic credit invoices are revolutionizing financing for SMEs in Argentina. Fintech platforms are instrumental in driving the adoption and growth of these invoices by providing easy access to funding, disseminating information, and offering valuable insights and advice. With the potential for significant expansion in the coming years, electronic credit invoices are poised to play a pivotal role in supporting the financial needs of SMEs and promoting economic growth in Argentina.
