In Italy, creditworthiness information exists only for companies and not for individuals, VAT numbers, and individuals. In fact, Vat parcels, since they do not have to submit financial statements on their business, make it impossible for rating companies to come up with adequate business ratings.
For individuals, on the other hand, data on their creditworthiness are available, in partial form, only to large financial companies if a consumer loan has been activated or a mortgage was taken out.
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SME defaults attributable 45 percent to individuals
In fact, the largest number of insolvencies is attributable precisely to business dealings with Natural Persons, as shown by a recent study by IREC Group, an Italian fintech dedicated to debt management and collection for Italian SMEs.
The survey, conducted among 1,200 Italian VAT parcels, regarding late and non-payment, found that 3 out of 4 VAT parcels, or 73 percent, accuse payment delays of more than 30 days, and 31 percent say they have between 4 and 6 unpaid invoices since the beginning of 2022. Forty-five percent of non-payments are reported to individuals, 34 percent to companies, and 24 percent have outstanding payments with both companies and individuals.
The K-SCORE Algorithm
The IREC Group has developed an innovative algorithm called the K-Score that will be able to provide a Solvency Rating on individuals and VAT accounts. To complete the development of the K-Score platform, the company has launched an equity crowdfunding campaign on Crowdfundme with the goal of raising €300,000, with a pre-money valuation of €3,200,000.
Explains Victor Khaireddin, CEO of IREC: “The algorithm performs cross-analysis of data from official sources, such as the land registry and Chamber of Commerce, and data from our internal databases, with more than 1,000,000 interconnections between creditor and debtor companies and exclusive information on the ability to honor debts in terms of reliability. Lastly, predictive behavioral analysis is carried out, through the analysis of people’s language on social networks. Indeed, there are strong correlations between the linguistics expressed on social networks, the socio-economic background of the person, and the personality of an individual.”
The algorithm thus formulates an initial DISC ‘profile’ of the person, i.e., a model that identifies the person’s prevailing behavioral style, and this is then subsequently re-processed through official data and IREC-owned databases. This means that in real-time, by cross-referencing all the information collected, we are able to assess the trustworthiness of an individual.”
To make this possible, the K-Score leverages Machine Learning, an algorithm that allows intelligent machines to improve their performance over time. In addition, computational psychometrics models that analyze data from psychometrics and cognitive science, applied to big data, are also examined.
“The platform, once realized,” Khaireddin explains, “will give the possibility to industrialize the delivery of services, so as to make them economically accessible to SMEs and Professionals. From the equity crowdfunding campaign will be born what we can consider the first fintech in Italy able to offer SMEs, in a structured way, both business intelligence (predictive reliability analysis) and debt collection services.”
Who is Gruppo IREC
Gruppo IREC is an innovative SME founded in 2016 by Victor Khaireddin, but the Khaireddin family has been in the credit management business since 1987. The company is focused on assisting SMEs and Professionals in the management of receivables from their clients and operates through two Business Units: Gestionedelcredito.com, a subscription-based service for business information and debt recovery, and Rintracciofacile.it, ad hoc information services on the assets of individuals and businesses for debt recovery.
In 2021, it achieved a turnover of €970,000, with 1,800 debt collection cases processed, 3,900 investigations carried out, €9.96 million in receivables managed of which €1.10 million were recovered.
As of August 31, 2022, turnover has already reached €902,000, with 2,386 files and a volume of entrusted receivables of €8.4 million of which €1.15 million was recovered.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in Crowdfunding buzz, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
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