Working Capital Management Based On Financial Supply Chain-Circulation Of Credits And Counterbalance Of Debts

Trade credit plays a vital role in filling the financing gap between supplying goods and receiving payments in supply chain, but also presents a challenge to the management of enterprises’working capital. Inefficient operation of working capital not only represents the financing difficulty of enterprises’receivables, but may also trigger extensive inter-enterprise debts and get enterprises into a receivable-and-payable-double-high situation. Financial supply chain management is a method to manage working capital based on the whole supply chain and provide liquidity for all enterprises through the coordination between upstream and downstream enterprises. This thesis aims to explore an effective mode to manage enterprises’working capital based on the concept of financial supply chain management and solve related problems such as debt network optimization, risk allocation and timing for settlement. Its main contents and innovations are as follows:(1)A management mode is proposed based on circulation of credits and counterbalance of debts. By coordinating information, credit, fund and goods of the supply chain, enterprises’receivables can be used to finance capital investment or the purchase of goods, and enterprises’debts can be automatically offset. Thus, the receivable financing difficulty and the inter-enterprise debt problem are resolved fundamentally at the source as well as at the outbreak, and enterprises’receivable and payable are both reduced. This management mode is a pioneering financial service in our country and has been granted to launch pilot projects and to expand. By coordinating various resources in financial industry, it provides convenient financing channels and efficient debt repayment mechanism for enterprises, and unclogs fund flow of the whole supply chain based on joint management of credit and debt, which can improve the whole supply chain’s competitiveness and stability.(2)An optimization algorithm based on forward debt chain and backward debt chain is proposed. The adoption of forward debt chain and backward debt chain helps simplify enterprises’interconnected debt relations and guarantees complete offset of multilateral debts. Meanwhile, clearing efficiency for triangle debts is improved due to the avoidance of repeatedly searching debt relations and optimization can be fulfilled for large-scale debt network.(3)The risk contagion and unwinding problem are discussed under the mode of debt counterbalance. The risk allocation for enterprises is analyzed based on Lamfalussy rule, and real data of sovereign debt are employed to verify the advantage achieved in risk management by the debt counterbalance mode.(4)A model of enterprises arranging debt settlement timing is built under the mode of debt counterbalance. Settlement behavior of net-intermediary, net-creditor and net-debtor are analyzed respectively, and the effect of the difference between credits and debts on cost management is investigated to support enterprises’strategic arrangement about debt settlement timing. The effect of interval between two counterbalances on settlement cost is investigated for different debt-and-credit distributions to support the state-owned management company’s decision about counterbalance timing.Working capital management is of vital importance to both enterprises’ continuing operation and supply chain’s stability. Especially in the face of economic globalization, working capital management based on supply chain can strengthen enterprises’ability to manage risk and adaptability to volatile market circumstances. Therefore, this thesis exhibits values for both the researchers and practitioners.