Study On Multinational Corporation Accounts Receivable Financing

With the development of economic globalization and fierce competition ininternational markets, multinational corporations are playing an increasinglyimportant role in the world economy. Meanwhile, increasing competition in theinternational market makes the buyer’s market which is characterized by the worldtrade pattern has been basically formed, credit sale and other sellers of credit havebecome the mainstream of international settlement. In this case, a large number ofaccounts receivable’s emergence is inevitable. Receivables which take a lot of moneyaffected the turnover rate of working capital and increased the enterprise’s operationalrisk to a certain extent. On the other hand, with the deepening of financial marketsand innovation of financial instruments, more and more companies choose to useaccounts receivable financing. By the way of accounts receivable financing, anenterprise use the receivables that formed by the credit receivables to get thenecessary funds through a special finance institutions. With the purposes of solve thelack of fund to strength liquidity. In recent years, accounts receivable financing hasdeveloped rapidly.There are three basic Accounts receivable financing choices: accounts receivablepledge financing, Accounts receivable for allocation and accounts receivablesecuritization. Each of them can generate cash for firm, while different mode offinancing applied to different situations as well as different costs. Compared toordinary enterprises Multinational companies faced with more uncertainty factorswhich play varying effects on the choosing of specific financing way.This paper firstly expounded three financing modes and feathers of each mode.Secondly, based on the reality of multinational companies, discussed various specialrisks multinational companies may faced with during operating. And the influencesmay play on the choice of special financing ways. On this basis, the authorsummarized four typical risk combinations the multinational companies may met during operating, and by comparing the cost and income of each mode under differentrisk combinations to get the appropriate choice. In the case of H, analyses expectedfinancial results of different choices. In the conclusion chapter, the author thinks thatmultinational company should choose suitable financing mode on the consideration oftheir own specific situation, compared the cost with the profit as well as avoidfinancing risk during operating. Hope this paper can provide some practical guidanceand reference for multinationals.