A Steady Climb

Executive Summary

• As banks continue to tighten lending standards, factoring is becoming an increasingly important source of working capital financing for Italian SMEs, providing liquidity, credit protection and funding linked to business activity
• International and non-recourse factoring are expanding in relevance, helping Italian exporters support cross-border growth while managing rising counterparty credit risks in global markets
• The Italian factoring market continues to grow while maintaining strong asset quality, with over 97% of exposures performing, reflecting disciplined underwriting, portfolio monitoring and effective risk management
• Supply Chain Finance is evolving beyond traditional solutions, with confirming programs gaining momentum as corporates strive to optimise payment cycles, strengthen supplier liquidity and improve value chain resilience

Stable turnover amid macroeconomic headwinds

In 2025, factoring continued to grow in turnover, supported by rising demand for working-capital solutions and a widening SME funding gap. We believe that the market still has room to grow as businesses increasingly rely on receivables financing for liquidity.

In 2025, the Italian factoring and confirming market continued to grow despite a more challenging macroeconomic environment, marked by slower economic growth and higher energy costs. These pressures weighed on corporate performance, compressing margins and contributing to a moderate rise in insolvencies across the board.

The broader credit landscape remains constructive, with default rates declining across both private credit and broadly syndicated loans (BSLs), alongside tighter 10-year BTP-Bund spreads and lower 5-year Italian CDS levels, signalling improved market confidence.

Refinancing activity is increasing, as is the share of newly originated loans incorporating payment-in-kind (PIK) features, potentially masking a gradual deterioration in underlying credit quality.

In this environment, Italian factoring turnover reached €289.1bn (2020-25 CAGR of c.4.9%), equivalent to approximately 13% of nominal GDP, and grew by 3.8% YoY excluding the now largely exhausted impact of building bonus tax credit transactions. Internationally, Italy consolidated its position as the fourth-largest factoring market in Europe, while global factoring volumes exceeded €4 trillion in 2025

A key growth opportunity for the market stems from the widening funding gap affecting European SMEs. Over the past three quarters, banks have adopted a more selective risk appetite, prioritising lower-risk borrowers and tightening lending conditions for smaller businesses (please refer to Aluna Partners European Funding Gap Report).

Recent ECB data highlights the scale of this divergence. In Q4 2025, 7% of surveyed banks reported a net tightening of credit standards for loans and credit lines to firms, alongside a more modest increase in credit demand (3%). Evidence from Italy points in the same direction: a Bank of Italy survey covering 236 banks shows a renewed tightening in credit supply, with the Total Diffusion Index turning positive after an easing cycle in H2 2024. In this context, factoring continues to serve as a critical complementary source of liquidity for Italian corporates, particularly SMEs, which accounted for over 60% of active clients in 2025.

Finally, the industry maintained strong asset quality and demonstrated notable resilience, with performing assets accounting for 97.1% of total exposures. Aluna Partners’ proprietary index shows a loss rate as low as 1.02%. Overall, the high quality of Italian factoring exposures enabled the industry and its key players to navigate a challenging environment while continuing to expand turnover.

2025 Italian Factoring in numbers

Total Turnover: €289.1 (+3.83% YoY; 5-year CAGR: 4.9%)

• Domestic Turnover: €214.8bn (-0.5% YoY)
• International Turnover: €74.3bn (+2.1% YoY)
• Share of GDP: 13%

Factoring Breakdown:

• Non-Recourse Factoring (Pro Soluto): €239.8bn (+3.1% YoY)
• Recourse Factoring (Pro Solvendo): €49.2bn (-11.9% YoY)

Supply Chain Finance (SCF): €27.3bn (-2.4% YoY)

• Confirming (within SCF): €5.4bn (+29.7%)
• Purchase order finance: €1.1bn (-20.0% YoY)

A market increasingly shaped by risk transfer, flexible supplier finance, and cross-border growth

Italian factoring is increasingly shifting toward non-recourse and risk-transfer structures, supported by strong asset quality and the growing use of true-sale receivables purchases. At the same time, confirming and international factoring are gaining traction, reflecting demand for more flexible and diversified working capital solutions.

The market structure is characterized by a clear predominance of non-recourse (pro-soluto) transactions, which account for 83% of total turnover, a trend sustained over recent years. This reflects structural factors, including the high share of SMEs, which increasingly use factoring to optimize leverage and working capital ratios.

The growing use of true-sale receivables further supports this shift, enabling companies to derecognize assets and strengthen their balance sheet.

By contrast, recourse factoring (pro-solvendo) accounted for €49.2bn, or approximately 17% of total turnover. Its gradual decline underscores the ongoing shift toward risk-transfer solutions, as companies seek to preserve liquidity while reducing retained credit risk. This transition is underpinned by strong asset quality. According to Assifact, non-performing exposures remain low at 2.1% of total exposures, while Aluna Partners reports a loss rate of just 1.02% on its factoring benchmark portfolio.

Together, these indicators highlight a supportive environment for non-recourse structures from both an originator and investor perspective.

Supply Chain Finance (SCF) remains a key segment of the Italian market, with total volumes of approximately €27.3 billion. While overall activity has entered a phase of maturity following several years of expansion, its internal composition continues to evolve. Reverse factoring remains the dominant component, although volumed declined over the year. In contrast, confirming programmes grew by nearly 30%, reaching €5.4 billion. This shift reflects increasing adoption of more flexible supplier finance solutions by larger corporates seeking to optimise payment cycles.

From a distribution perspective, the market is predominantly domestic, although cross-border activity is gaining relevance. International factoring exceeded €74 billion in 2025 accounting for 25.7% of total turnover, driven primarily by Italy’s export-oriented corporate base.

This trend is particularly relevant in the current export environment: according to Allianz Trade Research, global insolvencies are expected to rise for a fifth consecutive year in 2026, with Europe among the most exposed regions.
In key Italian export markets, such as France, Germany, the United Kingdom, and the United States, insolvency levels remain 10–30% above pre-pandemic averages.

As a result, the primary risk for Italian exporters is shifting from demand to counterparty credit risk. While export volumes are expected to remain resilient (with SACE forecasting growth in 2026 and 2027), the creditworthiness of foreign buyers is becoming a more critical factor.

The bottom line is clear: export-led factoring continues to expand, but will increasingly require more sophisticated credit risk management frameworks from both factors and corporates.

Aluna Partners addresses these risks through a proprietary in-house credit risk model, which assesses and stress-tests both seller and debtor credit profiles under multiple macroeconomic scenarios. Risk mitigation is further enhanced through credit insurance coverage of up to 95% of invoice face value, complemented by transaction-specific concentration limits and eligibility criteria. Together, these measures significantly reduce exposure to underlying credit risk.

Notably, non-notification structures accounted for more than 52% of total turnover, highlighting a clear preference among companies to retain direct commercial relationships with their customers.

An industrial, Northern-led market with volumes concentrated among larger corporates

Italian factoring remains concentrated among industrial and export-oriented companies, with manufacturing representing the largest client segment and Northern Italy accounting for the majority of turnover. While SMEs comprise the bulk of active clients, larger corporates continue to generate most volumes. Increased selectivity has also led to lower SME turnover and higher debtor concentration.

Italian factoring is most widely used by medium to large, innovative, and export-oriented industrial companies, while penetration remains lower in construction, retail, and other service sectors. Manufacturing continued to represent the largest client segment in 2025, with over 9,400 active companies, and showed a recovery across both SMEs (+12% vs 2024) and larger corporates (+5%), following the contraction observed in 2023–2024. Activity in the service sector also improved, particularly among SMEs (+9%), while volumes among larger corporates remained broadly stable.

The market is moderately concentrated, with the eleven largest sectors accounting for approximately 69% of classified turnover. The largest shares are generated by holding and group finance companies, wholesale trade, and utilities, followed by food, transport, and construction. The prominence of holding and financial entities partly reflects the use of centralised treasury structures within large industrial groups, where receivables originate across multiple operating sectors.

Geographically, factoring activity is concentrated in Northern Italy, in line with industrial production, with Lombardy alone accounting for around 40% of domestic turnover.

While SMEs account for more than 60% of active assignors, they generate only around 20% of total turnover, confirming that larger corporates continue to drive market volumes. Following sustained growth between 2021 and 2024, SME turnover declined in 2025, whereas larger corporates recorded a moderate recovery, returning to positive growth.

A similar divergence is evident in bank lending. Credit to small firms contracted by 7.6% in 2023, 6.7% in 2024, and 4.3% in 2025, while lending to medium-large firms improved from -3.2% to -1.8% and then +2.4%. As a result, the gap between the two segments widened from 4.4 percentage points in 2023 to 6.7 points in 2025.

Portfolio dynamics also point to increased selectivity. The average number of assigned debtors per assignor declined between 2024 and 2025, as assignors fell marginally (-0.7%) while assigned debtors dropped significantly (-15.2%), indicating a more concentrated portfolio and stricter counterparty selection—both from corporates and factors.

Overall, Italian factoring remains concentrated among larger, Northern industrial corporates, while SMEs face increasingly selective access to financing.

ESG integration, SCF innovation, and disciplined risk management underpin the market’s long-term resilience

Italian factoring is evolving into a more strategic and sophisticated financing tool, supported by deeper ESG integration, the ongoing development of Supply Chain Finance solutions, and disciplined risk management. Strong asset quality, together with the rapid growth of confirming, further reinforces the sector’s structural resilience.

Strategically, the Italian factoring market continued to evolve in 2025 along three key dimensions: ESG integration, Supply Chain Finance (SCF) innovation, and increasingly sophisticated risk management. Together, these trends reinforce factoring’s role not only as a source of liquidity, but as a strategic financial management tool for corporates.

First, ESG considerations are becoming firmly embedded in governance and underwriting frameworks. According to the Assifact Sustainability Survey, nearly 90% of market participants now monitor climate and environmental risks, while ESG governance represents the most advanced area of maturity, with most firms having dedicated sustainability structures. In addition, 79% of surveyed companies have adopted formal environmental policies, pointing to continued strengthening of ESG practices.

Second, SCF remains a key area of structural growth despite a stabilisation in overall volumes. While reverse factoring continues to dominate, confirming programmes expanded by approximately 25% in 2025, reflecting rising demand for more flexible and scalable supplier financing solutions.

Finally, risk management and asset quality remain core strengths of the market. Approximately 98% of exposures are classified as performing, with non-performing exposures limited to around 2.1% of gross exposures.

Overall, the combination of disciplined credit management, product innovation, and deeper ESG integration continue to underpin the sector’s long-term resilience.

Outlook: Sustained growth underpinned by structural tailwinds

The outlook for the Italian factoring market remains positive. According to Assifact, volumes are expected to grow by approximately 3.6% in 2026, outpacing GDP and reinforcing factoring’s structural role within the Italian financial system. Demand should continue to be supported by persistent working capital needs, the increasing relevance of Supply Chain Finance solutions, and the use of factoring as a complementary funding source alongside traditional bank credit.

Supply Chain Finance and international activity are expected to remain key growth areas. While reverse factoring is entering a more mature phase, confirming programmes are likely to expand further, driven by corporates’ focus on supplier financing and liquidity optimisation across value chains. In parallel, the rise of international factoring reflects its growing importance in supporting Italy’s export-oriented economy.

Risk and sustainability considerations are also becoming central to the market’s evolution. The sector continues to exhibit strong asset quality and disciplined risk management, with ESG factors increasingly embedded in underwriting and portfolio monitoring frameworks.

Looking ahead, Aluna Partners expects growth to be driven by the expansion of international factoring and confirming programmes, alongside deeper ESG integration. This should support higher turnover while preserving underlying asset quality, further consolidating factoring’s role as a resilient and complementary financing solution.

Conclusion

The Italian factoring market demonstrated strong resilience in 2025, with turnover reaching €289.1bn and growing by 3.8% excluding building-bonus tax credit transactions. Factoring further strengthened its role as a core source of working capital financing, supported in part by Italy’s export-oriented economy. International factoring volumes reached €74bn, accounting for more than one-quarter of total activity.

Market development was characterised by a continued shift toward non-recourse structures, strong growth in confirming, and increasing adoption of flexible supplier finance solutions. At the same time, more disciplined underwriting contributed to greater portfolio concentration and a decline in SME-generated turnover, despite a recovery in manufacturing and service-sector SMEs.

Asset quality remained robust, with approximately 98% of exposures classified as performing. Aluna Partners’ benchmark portfolio reported a loss rate of just 1.02%, underscoring the effectiveness of targeted risk management and underwriting practices across the industry.
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