Starting January 2024 we have a new real-time index available, born from the collaboration between Centro Studi Confindustria, TeamSystem and modefinance: the Real Time Turnover Index (RTT), an indicator that tracks the dynamics of the volume of economic activity in Italy, based on companies' electronic invoicing data.
It is the result of the collaboration born in 2023 between the Centro Studi Confindustria and TeamSystem, the group holding modefinance, and was designed to empower companies in the lack of a publicly available and continuously updated information cycle, capable of providing a representative and timely picture of the system Italian production; this, through the analysis of the percentage change in turnover - in cyclical terms - of all economic macro-sectors. The results of the processing take place on electronic invoice data, on a sample of approximately 180 thousand companies, mainly SMEs, operating in all industries and territories of the Italian economy.
The RTT Index is monthly, and to date represents the first data available on the real economy compared to other signals: to cite the comparison with the best known indicator (ISTAT), there is no such a quarterly/monthly data on turnover for the total economy, which was annually available, with a consistent delay compared to the needs of the market and analysts. RTT Index therefore fills this gap in official information, making real-time data available.
This index is published monthly by the Centro Studi Confindustria, together with a detailed analysis, and will also be proposed on our press center.
The RTT Index consists of monthly data on the average turnover for the entire Italian economy, seasonally adjusted and measuring its volume. This is "real economy" variable, measured starting from the invoices actually issued in Italy and not estimated, and 3 types of disaggregation of this data are available, for a total of 11 detailed indices:
- Localization territory, in 4 macro-areas (i.e. North-West, North-East, Centre, South-Islands);
- Company industry, in 4 macro-sectors (i.e. agriculture, industry, construction, services);
- Company size, in 3 classes (i.e. small, medium, large).
On the right, you will find February's 2024 example: the color scale well explains the substantial extremes of growth (+1, +3) or decline (-1, -3), where the intermediate indications indicate a moderate change (between 0 and 1), significant (between 1 and 2) and strong (between 2 and 3). In this case, the data referring to the month of January 2024 show a slight decline in companies' turnover at constant prices, equal to -0.4%.
Modefinance's role: the proprietary Nowcasting model
Where does modefinance fit into all this? Easily explained: the technologies underlying the RTT tool are proprietary, and rely on the modefinance Nowcasting model, developed during Covid times, to support business dealing with the uncertainty of such an extreme time, and generated in the following years. Thanks to the ever-increasing uncertainty, which characterizes our times, and the vital need to obtain realtime data, Nowcasting allows the integration of anonymized and aggregated financial data, thanks to the information pool of the TeamSystem group.
How does this help companies and financial institutions? You obtain reliable and real-time information on partner companies, customers and/or suppliers, on SMEs in particular.
The opportunity to access and work in a datalake of the majority of Italian electronic invoices (B2B) made it possible to create a Nowcasting MORE Score based on the progress of the transaction: Nowcasting answers to the lack of data for small and medium-sized companies, and to the low-frequency information update (due to annual and interim financial statements), thus facilitating credit risk management. In fact, having updated analysis allows short-term predictions to be made, using public data together with alternative data.
Nowcasting is one of the most innovative tools with predictive power in the financial world, to understand the economic-financial health of companies in the short term, as well as offering the performance of a specific sector.
Nowcasting, once again: what is it?
The concept of Nowcasting has been borrowed from meteorological science, and indicates the type of data available in real time that makes the models that use it more accurate than traditional predictive algorithms, often based on outdated, rarely fresh information. The model developed by modefinance is based on the invoice data of Italian companies, anonymized and aggregated by sector, geographical area and creditworthiness class; by analyzing the value of the invoices issued, the number and median value of the invoices of the cluster of companies thus defined, an index of the trend of the monthly turnover of the microsector is obtained, capable of highlighting in real time a decline or sudden growth in the volume of business of the cluster considered.
The division of the index into strings allows us to obtain a score, the Nowcasting Score, capable of highlighting the financial quality of the companies considered. The model validation process has in fact highlighted a strong correlation with the MORE Score.
The index shows a higher number (+X) for healthy companies, decreasing progressively as the creditworthiness class worsens (-Y). This correlation allows the Nowcasting score to be read also as an indicator of the riskiness of the company. In addition to this indicator, the model returns the change in company turnover compared to the previous period considered (Sales Trend Analysis) and the percentage change expected for the microsector at the end of the year considered (Sales Forecast).
This data can be used within the budget simulation model in order to estimate the evolution of the budget and the forecast MORE Score.