Supply chains in the Romanian food industry were not interrupted during the pandemic, but they had blockages due to the war in Ukraine
August 23, 2022 at 8:30:00 AM
Instant Factoring Study: Wholesale & distribution industry in Romania
Bucharest, 23th of August 2022
Instant Factoring, the Romanian fintech specializing in microfinancing for small and medium companies, launches a sector study on the challenges faced by the post-pandemic wholesale & distribution industry and shows the effects of the military-political conflict in Ukraine. Romanian entrepreneurs interviewed by Instant Factoring complain about the massive increase in payment terms and the supply chain crisis affecting the country's entire economy. To meet these challenges, entrepreneurs have resorted to factoring, a solution that helps entrepreneurs continue their businesses.
Initially, the year 2022 came with a gradual reopening of the global economy when Romania lifted all Covid restrictions. The turnover in the wholesale trade increased by 28.8%, in the first four months of this year, compared to a similar period in 2021, according to the National Institute of Statistics (INS).
”During the pandemic, retailers had to adapt to the situation and adopt new methods to continue their activity. With the crisis in Ukraine, most industries were affected due to raw materials and packaging. After that, all the supply chain costs led to crises. A crisis that the world still doesn't talk about much is the workforce crisis. Many Romanians go abroad because the pandemic restrictions have been lifted, and they can return to work outside our country”, explains Cătălina Aldea, consultant and managing partner at Aldea Consulting.
More than 40% more expensive for raw materials
With the military-economic crisis in Ukraine, price increases continued, and the price of raw materials in several industries, including the food industry, increased by more than 40%.
”If before, palm oil was 4 lei, now it is 14 lei. Margarine jumped from 4 lei to 12 lei, and sunflower went from 8 lei to 15 lei/kg”, explains a representative of the food distribution from Oradea.
Also, small businesses have experienced an increase in late payments. At the moment, in some cases, the carriers receive the payment even after 120 days.
"Most of the time, in the retail and wholesale industry, the issue of payment terms is difficult to manage because these aren't necessarily calculated from the first day of invoicing. Retailers, for example, have to pay their importers faster than they collect the money from customers", explains Cristian Ionescu, CEO of Instant Factoring.
46% increase in fuels
This conflict also caused a price increase. Fuel prices, for example, increased by 46% compared to May 2020, when diesel price was 4.27 lei/liter. In June of this year, diesel reached 9.24 lei/liter.
"Now we have logistics problems because the border is blocked due to the war in Ukraine. Before it took 2-3 days for a truck to arrive from Moldova to Romania, but now it takes up to two weeks. That means a higher cost for transportation", explains Oleg Caminschi, owner of the distribution company FRUDOVA FRUITS SRL.
Factoring, the ideal solution for an optimal cash-flow
For entrepreneurs in the wholesale industry, one of the most accessible solutions proved to be factoring, the discounting of invoices to fast acquisition of cash. When asked what they had first paid with the money obtained from factoring, most representatives of the wholesale & distribution companies stated they could pay their bills on time, while others reported that they used the money to grow their business.
“Factoring has helped us bring in larger inventory to increase sales. It is important in our business because it helps us to develop. With the help of Instant Factoring, we increased the turnover of goods by 50%”, explains a representative of the company ANBOSE BEVERAGES S.R.L., a wholesale company that sells organic juices.
"What helped us the most was having more stock in the warehouse and automatically increasing our sales. Obviously in our business it is important to increase sales because that comes with the company's development", says the shareholder of FRUDOVA FRUITS SRL.
The complete Instant Factoring study can be found by accessing this link or in Press KIT.
About Instant Factoring
Instant Factoring is the first fintech online micro-financing company in Romania, dedicated to small-sized companies and micro-enterprises, member of the European association of companies, Fintech Innovate Finance, based in London. Instant Factoring is the first non-bank financial institution registered at the National Bank of Romania. By launching the online factoring platform www.instantfactoring.ro , the company is set to support the development of small companies through easy and fast financing solutions, using technology.
In 2020, Instant Factoring was awarded “The Best Digital Factoring for SMEs in Central and Eastern Europe” by the SME Banking Club Europe.