The Research On Inventory Financing New Financing Mode And Risk Assessment Under Supply Chain Finance

In recent years, it has seriously hindered the growth of the economy by the difficulty that minor enterprises get invested. In2011, we constantly read the news in the newspaper that so many minor enterprises bankrupted and hence, the bosses were nowhere to find. It is just this financing status that draws our attention to the supply chain finance. Supply chain finance based on Self-liquidating trade finance is to provide finance to the minor enterprise upstream and downstream of the core enterprise on the basis of the credit of the core enterprise. Theoretically, it will help the minor enterprises to get finance in the situation of lack of mortgage and guarantee. By the pledge of inventory, accounts receivable, prepayments and core enterprises’repayment of loans, the minor enterprises could get access to finance. Thus, the minor enterprises could get rid of the bottle neck of finance and get sustainable development.For supply chain finance, there are3products. That is, Inventory Financing, Accounts Receivable Financing and Prepayment Financing. And also there are some other kinds of products, but they are mostly derived from former3products. However, there exist some defects among current inventory financing.(1) The third-party-logistics is involved which increase the financing costs.(2) The frequent transport of the goods makes more cost on the logistics.(3) If there is some accidents happened when transporting, it may affect the normal production. In addition, there are some problems on the risk assessment of financing.(1) Only concentrating on the finance information of the company but ignoring its production capability.(2) The risk control mostly done in the middle of the financing process, but no exact action before the financing.This paper proposes new financing mode and its risk assessment methods aiming at the defects on these two aspects. Firstly, the new mode is to decrease the costs of inventory financing. The costs arise on the supervision and transportation by the third-party-logistics. Also, this mode could optimize the risk assessment methods in order to control the risks before and during the financing process. Secondly, this paper, standing on the point of management, believe that the risk assessment has to concentrate on the production capacity of the borrowing enterprises, also the credit from core enterprise and the state of the supply chain operation, but not just the finance index of the borrowing company. All the conclusions are got by the related analysis methods, such as logical analysis and Analytic Hierarchy Process. I hope that this research could help minor enterprises with their financing difficulties, and at the same time, bring win-win to both supply chain and banks.The research steps of this paper are as follows:Firstly, analyze the disadvantage of current inventory financing mold, and figure out the reason that case it. Only by finding out its essential reason, could it be helpful for us to solve the problems. Therefore, this paper adopts logical analysis method to figure out the reason that causes high cost and find out a way to improve the inventory financing mode, thus avoid more costs.Secondly, during the creating of the new mode, we not only consider the financing cost, but also the risk problems. Right now we have some kind of supply chain finance products, but it is developing so slowly that sometimes we can hardly notice its existence. The main reason that causes this phenomenon is that the risk is difficult to quantify. Therefore, the after risk control always make the bank lose some money when a breach of contract happened. It could hardly make the risk warning and prevention. In one word, the new mode has to take all these problems into consideration and solve them at last.Finally, we usually adopt scoring method to evaluate the risk. Actually, the weights of each index are different and the weights are the key points of the risk scoring process. This paper, from a managerial point of view, suggests that we put much more emphasis on the production capacity evaluation on the borrowing company. And the Analytic Hierarchy Process method could show this emphasis by weights of each index, which makes it more accurate to assess risk.On the former assumption, this paper does a research on the new mode and its risk assessment method on supply chain finance, hoping that this research could provide theoretical basis for rapid growth for the supply chain finance.